Required information [The following information applies to the questions displayed below.] Satellite Systems modified its model 22 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total $4,100,000 1,200,000 610,000 410,000 81,000 41,000 $6,442,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Patont costs capitalized Required: 1. Determine the amount Satellite Systems should capitalize to the Patent account in the balance sheet.

Required information [The following information applies to the questions displayed below.] Satellite Systems modified its model 22 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total $4,100,000 1,200,000 610,000 410,000 81,000 41,000 $6,442,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Patont costs capitalized Required: 1. Determine the amount Satellite Systems should capitalize to the Patent account in the balance sheet.

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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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…
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2 Required information [The following information applies to the questions displayed below.) Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Testing and modification of the prototype Development of a prototype device t Legal fees for patent application Legal fees for successful defense of the new patent Total $ 3,400,000 1,080,000 540,000 340,000 74,000 34,000 $ 5,468,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. 2. How much should Satellite Systems report as research and development expense in the income statement? Research and development expense
Accounting Question
Subject : Accounting
47
answer with narrations explanation computation for each entry for each parts clearly and completely answer in text form
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