In 2021, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company madethe following expenditures:Basic research to develop the technologyEngineering design workDevelopment of a prototype deviceAcquisition of equipmentTesting and modification of the prototypeLegal and other fees for patent application on the new communication systemLegal fees for successful defense of the new patentTotalThe equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $17,000.During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above ascosts of the patent. Management contends that the device simply represents an improvement of the existing communication system ofthe 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 listJournal entry worksheet<1 2 3Record the correcting entry for R&D costs.Note: Enter debits before credits.Transaction1Record entryGeneral JournalClear entryDebit$2,350,000750,000370,00067,000270,00047,00027,000$3,881,000CreditView general journal

Name: In 2021, Space Technology Company modified its model Z2 satellite to
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Description: In 2021, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company madethe following expenditures:Basic research to develop the technologyEngineering design workDevelopment of a prototype deviceA

Answer : Research and development expenses = $2,350,000 + $750,000 + $370,000 + $270,000 =…

Business

Accounting

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 20 During your year-end review of the accounts related to intangibles, you discover that the company has costs of the patent Management contends that the device simply represents an improvement of the ex the satellite and, therefore, should be capitalized. Required: Prepare correcting entries that reflect the appropriate treatment of the expenditures. (If no entry is req select "No journal entry required" In the first account fleld.)

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 20 During your year-end review of the accounts related to intangibles, you discover that the company has costs of the patent Management contends that the device simply represents an improvement of the ex the satellite and, therefore, should be capitalized. Required: Prepare correcting entries that reflect the appropriate treatment of the expenditures. (If no entry is req select "No journal entry required" In the first account fleld.)

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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