Compute the carrying value of patent

Assignment Help Accounting Basics

Reference no: EM131962221

Problem

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 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.

Date	Activity	Cost
2008-2009	Research conducted to develop precipitator	$366,000
Jan. 2010	Design and construction of a prototype	87,400
March 2010	Testing of models	42,000
Jan. 2011	Fees paid engineers and lawyers to prepare patent application;
	patent granted June 30, 2011	68,000
Nov. 2012	Engineering activity necessary to advance the design of the
	precipitator to the manufacturing stage	86,000
Dec. 2013	Legal fees paid to successfully defend precipitator patent	42,000
April 2014	Research aimed at modifying the design of the patented precipitator	43,000
July 2018	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, 2016, it revised its useful life estimate downward to 5 remaining years. Amortization is computed for a full year if the cost is incurred prior to July 1, and no amortization for the year if the cost is incurred after June 30. The company's year ends December 31.

Compute the carrying value of patent No. 758-6002-1A on each of the following dates:

(a) December 31, 2011.
(b) December 31, 2015.
(c) December 31, 2018.

Reference no: EM131962221

Questions Cloud

Accelerated depreciation versus straight line depreciation : What is the main benefit of using Accelerated Depreciation versus Straight Line Depreciation?

Prepare the journal entry to record the given redemption : Shamrock Co. is building a new hockey arena at a cost of $2,600,000. Prepare the journal entry to record this redemption.

Find the predictive regression equation : The following table gives information on the amount of sugar (in grams) and the calorie count in one serving of a sample of 13 varieties of Kellogg's cereal

How much interest is earned on this investment : You inherit $134,000 and decide to invest it for 90 days compounded daily at 7.25% annual interest (exact).

Compute the carrying value of patent : Compute the carrying value of patent No. 758-6002-1A on each of the following dates: December 31, 2011, December 31, 2015 and December 31, 2018.

What kind of test should be used : Vegapunk thinks that watching anime (Japanese animated shows) decreases social skills in college students. To test this, Dr. Vegapunk randomly selected 30

What is the exact probability that you score : What is the exact probability that you score a 5 by using approximation to estimate

Confidence level for a confidence interval for a mean : The confidence level for a confidence interval for a mean is the probability that individuals in the population have values that fall into the interval.

Compute the net present value and internal rate of return : Option A would have an initial lower cost. Compute the (1) net present value, (2) profitability index, and (3) internal rate of return for each option.

User Account

All Pages