ment CALCULATOR FULL SCREEN PRINTER VERSION BAck NEXT Brief Exercise 12-9 Metloc

Question

ment CALCULATOR FULL SCREEN PRINTER VERSION BAck NEXT Brief Exercise 12-9 Metlock Industries had one patent recorded on its books as of January 1, 2017. This patent had a book value of $441,600 and a remaining useful life of 8 years. During 2017, Metlock incurred research and development costs of $95,000 and brought a patent infringement suit against a competitor. On December 1, 2017, Metlock received the good news that its patent was valid and that its competitor could not use the process Metlock had patented. The company incurred $102,000 to defend this patent. At what amount should patent(s) be reported on the December 31, 2017, balance sheet, assuming monthly amortization of patents? The amount to be reporteds Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Amount to be reprted on December 31, 2017 = $4,87,200 (a) (b) (c) (d) (e) (f) Carrying amount Life in months Amortization per month Months amortization for the year Amount of amortization for the year Carrying amount 12/31/2017 (a) / (b) (c) X (d) (a) - (e) Patent $       4,41,600 96 $    4,600 12 $           55,200 $ 3,86,400 Legal cost $       1,02,000 85 $    1,200 1 $             1,200 $ 1,00,800 $       5,43,600 $ 4,87,200 Workings: Computation of Life in months: Patent 8 years X 12 months = 96 months Legal cost 96 months - 11 months* = 85 months *January 1, 2017 to December 1, 2017 = 11 months

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