Solution-Compute the carrying value of the gazak

Compute the carrying value of the gazak

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Reference no: EM132197991

Question - Meadows Laboratories holds a valuable patent for a "gazak". The history of costs associated with the "gazak" are as follows.

Date	Activity	Cost
2000-2001	Research conducted to develop "gazak"	$117,000
Mar. 2002	Design and construction of a prototype	81,500
Oct. 2002	Testing simulations	36,750
Feb. 2003	Redesigning based on simulation results	41,250
Apr. 2004	Legal fees paid for patent granted May, 2004	69,955
May 2008	Legal fees paid to successfully defend patent	23,205
Jan. 2010	Research aimed at modifying the "gazak" design	17,500
Oct. 2013	Legal fees paid to successfully defend patent	11,240

Meadows assumed a useful life of 17 years for the patent in May, 2004. On January 1, 2012, it revised its useful life estimate downward to 6 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.

Instructions - Compute the carrying value of the "gazak" on each of the following dates:

(a) December 31, 2005.

(b) December 31, 2008.

(d) December 31, 2013.

(e) December 31, 2015.

Reference no: EM132197991

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Compute the carrying value of the gazak

Reference no: EM132197991

Reference no: EM132197991

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