Please help by showing how to get each number. Will rate. P12-2 (LOI,2,4,5) EXCE
ID: 2580228 • Letter: P
Question
Please help by showing how to get each number. Will rate.
P12-2 (LOI,2,4,5) EXCEL (Accounting for Patents) Fields Laboratories holds a valuable Patent(No. 584002-1 A) on a pre- cipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows.Explanation / Answer
Answer:
Compute the carrying value of patent No. 758-6002-1A
(a) on December 31, 2011
Costs to obtain patent Jan. 2011
$59,500
2011 amortization ($59,500 / 17 years)
3,500
Carrying value, 12/31/11
$56,000
Notes:
All of the costs which incurred prior to the January 2011 are related to the research and development activities and were expensed as incurred in accordance with GAAP.
________________________________________
(b)
on December 31, 2015
.
Carrying value of patent, Jan. 1, 2012
$56,000
Amortization 2012
3,500
Amortization 2013
3,500
(7,000)
49,000
Legal fees to defend patent Dec. 2013
42,000
Carrying value, Dec. 31, 2013
91,000
Amortization 2014
6,500
Amortization 2015
6,500
(13,000)
Carrying value, Dec. 31, 2015
$78,000
Notes:
The costs incurred in 2012 and 2014 are related to research and development activities and are expensed as incurred.
________________________________________
(c)
on December 31, 2018
Carrying value Jan 1, 2016
$78,000
Amortization 2016 ($78,000 / 5 years)
$15,600
Amortization 2017
15,600
Amortization 2018
15,600
(46,800)
Carrying value, Dec 31, 2018
$31,200
Notes:
The legal costs in 2018 were expensed because the suit was unsuccessful.
Costs to obtain patent Jan. 2011
$59,500
2011 amortization ($59,500 / 17 years)
3,500
Carrying value, 12/31/11
$56,000
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