Q4. Lara Company established a new machine for developed basketballs. As the machine is consideredvery advanced and valuable, the company had it patented. The following expenditures were incurred indeveloping and patenting the machine.(a) special equipment that was purchased to be used solely fordevelopment of the new machine .$182,000(b) salaries and outlying benefits for engineers and research scientists17,100(c)testing prototype .23,600(d)Legal fees for filing for patent .12,700(e)Fees paid to government patent office2,500(f)Drawings required by patent office to be filed withpatent application.4,700Lara Company has chosen to amortize the patent over its legal life. At the beginning of the second year,Lara Company paid $24,000 to successfully defend the patent in an infringement suit. At the beginning ofthe fourth year Lara Company determined that the remaining estimated useful life of the patent was fiveyears.Required1. Record the above transactions in general journal form for Lara Company for the first five years ofthe life of the patent. Include any amortization or depreciation for each period.2. Discuss the recognition, measurement, impairments and disclosure of Intangible assets.

Patent: Patent is an intangible asset or intellectual property. It provides right to its owner to…

Required 1. Record the above transactions in general journal form for Lara Company for the first five years of the life of the patent. Include any amortization or depreciation for each period. 2. Discuss the recognition, measurement, impairments and disclosure of Intangible assets.

Required 1. Record the above transactions in general journal form for Lara Company for the first five years of the life of the patent. Include any amortization or depreciation for each period. 2. Discuss the recognition, measurement, impairments and disclosure of Intangible assets.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Q4. Lara Company established a new machine for developed basketballs. As the machine is considered
very advanced and valuable, the company had it patented. The following expenditures were incurred in
developing and patenting the machine.
(a) special equipment that was purchased to be used solely for
development of the new machine .
$182,000
(b) salaries and outlying benefits for engineers and research scientists
17,100
(c)
testing prototype .
23,600
(d)
Legal fees for filing for patent .
12,700
(e)
Fees paid to government patent office
2,500
(f)
Drawings required by patent office to be filed with
patent application.
4,700
Lara Company has chosen to amortize the patent over its legal life. At the beginning of the second year,
Lara Company paid $24,000 to successfully defend the patent in an infringement suit. At the beginning of
the fourth year Lara Company determined that the remaining estimated useful life of the patent was five
years.
Required
1. Record the above transactions in general journal form for Lara Company for the first five years of
the life of the patent. Include any amortization or depreciation for each period.
2. Discuss the recognition, measurement, impairments and disclosure of Intangible assets.

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