Reference no: EM133092629
Question - Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator 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 that it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells one of its patents. The history of Fields patent number 758-6002-1A is as follows.
2011 - 2012 Research conducted to develop precipitator $369,000
Jan. 3, 2013 Design and construction of a prototype (capitalization criteria not yet met) 86,600
Mar. 15, 2013 Testing of models (capitalization criteria not yet met) 43,200
Jan. 4, 2014 Fees paid to engineers and lawyers to prepare patent application; patent granted January 4, 2014 52,700
Nov. 30, 2015 Engineering activity necessary to advance the design of the precipitator to the manufacturing stage 82,000
Dec. 31, 2016 Legal fees paid to successfully defend precipitator patent 42,000
Apr. 15, 2017 Research aimed at modifying the design of the patented precipitator 43,000
July 31, 2021 Legal fees paid in unsuccessful patent infringement suit against a competitor 35,000
Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2019, it revised its useful life estimate downward to five remaining years. The company's year ends December 31. Fields follows IFRS for reporting purposes.
Required -
1. Calculate the carrying value of patent No. 758-6002-1A on December 31, 2014.
2. Calculate the carrying value of patent No. 758-6002-1A on December 31, 2018.
3. Calculate the carrying value of patent No. 758-6002-1A on December 31, 2021.