Exercise 12-10 During 2010, George Winston Corporation spent $167,120 in researc
ID: 2481826 • Letter: E
Question
Exercise 12-10 During 2010, George Winston Corporation spent $167,120 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2010, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $34,080 related to the patent were incurred as of October 1, 2010. Prepare all journal entries required in 2010 and 2011 as a result of the transactions above. (Round answers to 0 decimal places, e.g. 8,564. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 2010 (To record research and development expenses) 2010 (To record legal expenses) 2010 (To record amortization expense) 2011 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO VIDEO LINK TO VIDEO On June 1, 2012, Winston spent $12,080 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2012. Prepare all journal entries required in 2012 and 2013. (Round answers to 0 decimal places, e.g. 8,564. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 2012 (To record patents) 2012 (To record amortization expense) 2013 SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO VIDEO LINK TO VIDEO In 2014, Winston determined that a competitor’s product would make the New Age Piano obsolete and the patent worthless by December 31, 2015. Prepare all journal entries required in 2014 and 2015. (Round answers to 0 decimal places, e.g. 8,564. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS
Explanation / Answer
1)
2010
Research and Development Expense..........................
167120
Cash..................................................................
167120
Patents........................................................................
34080
Cash..................................................................
34080
Amortization Expense................................................
852
Patents (34080/10)*3/12]..................................
852
2011
Amortization Expense................................................
3408
Patents (34080/10)............................................
3408
2)
2012
Patents........................................................................
12080
Cash..................................................................
12080
Amortization Expense................................................
3388
Patents (1420+1968)........................................
3388
Calculations:
Jan. 1–June 1: (34080/10)*5/12 = $1420
June 1–Dec. 31: (34080-852-3408-
– 1420 + 12080)/12*7/12 = $1968
2013
Amortization Expense................................................
3373
Patents (40480/12)............................................
3373
3)
2014
Amortization Expense................................................
17570
Patents (35139/2)..............................................
17570
(40480-1968-3373 = 35139)
2015
Amortization Expense...................................................
17569
Patents (35139/2)................................................
17569
(40480-1968-3373 = 35139)
1)
2010
Research and Development Expense..........................
167120
Cash..................................................................
167120
Patents........................................................................
34080
Cash..................................................................
34080
Amortization Expense................................................
852
Patents (34080/10)*3/12]..................................
852
2011
Amortization Expense................................................
3408
Patents (34080/10)............................................
3408
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