Posted: March 6th, 2014
Acc423-Margaret Avery Company from time to time embarks on a research program when a special project…
Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities.”>
E12-16 (Accounting for R & D Costs)
Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2011, the company expends $341,880 on a research project, but by the end of 2011 it is impossible to determine whether any benefit will be derived from it.
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a. The project is completed in 2010, and a successful patent is obtained. The R & D costs to complete the project are $131,580. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2012 total $22,900.
The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2012.
b. In 2013, the company successfully defends the patent in extended litigation at a cost of $55,120, thereby extending the patent life to December 31, 2020. What is the proper way to account for this cost? Also, record patent amortization (full year) in 2013.
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