required: repare correcting entries that reflect the appropriate treatment of the expenditures. (If no entry is required for a transaction/event, elect "No journal entry required" In the first account fleld.)
required: repare correcting entries that reflect the appropriate treatment of the expenditures. (If no entry is required for a transaction/event, elect "No journal entry required" In the first account fleld.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Hi there, can help with answering the attached questions, thanks so much.
![Exercise 10-26 (Algo) Research and development [LO10-8]
In 2021, Space Technology Company 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
Acquisition of equipment
Testing and modification of the prototype
Legal and other fees for patent application on the new communication system
Legal fees for successful defense of the new patent
Total
The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $30,000.
During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as
costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of
the satellite and, therefore, should be capitalized.
Required:
Prepare correcting entries that reflect the appropriate treatment of the expenditures. (If no entry is required for a transaction/event,
select "No journal entry required" In the first account fleld.)
View transaction list
Journal entry worksheet
1 2 3
<
Record the correcting entry for R&D costs.
Note: Enter debits before credits.
Transaction
1
Record entry
General Journal
Clear entry
Debit
$3,000,000
880,000
500,000
80,000
400,000
60,000
40,000
$4,960,000
Credit
View general journal](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F05c29da8-5e07-472c-a295-a56e55cdcfad%2F0c6141cc-4678-44eb-a1d2-463f583f01d8%2Fwncvb1g_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 10-26 (Algo) Research and development [LO10-8]
In 2021, Space Technology Company 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
Acquisition of equipment
Testing and modification of the prototype
Legal and other fees for patent application on the new communication system
Legal fees for successful defense of the new patent
Total
The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $30,000.
During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as
costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of
the satellite and, therefore, should be capitalized.
Required:
Prepare correcting entries that reflect the appropriate treatment of the expenditures. (If no entry is required for a transaction/event,
select "No journal entry required" In the first account fleld.)
View transaction list
Journal entry worksheet
1 2 3
<
Record the correcting entry for R&D costs.
Note: Enter debits before credits.
Transaction
1
Record entry
General Journal
Clear entry
Debit
$3,000,000
880,000
500,000
80,000
400,000
60,000
40,000
$4,960,000
Credit
View general journal
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