Reference no: EM131421412
The following information was taken from the internal financial records of Southern Robotics regarding a patent filed in 2011 for a new robotics arm used for manufacturing:
1. Legal and filing fees of $50,000 were paid during 2011 for filing the patent.
2. Legal fees of $200,000 were incurred and paid during 2012 to defend the patent against infringement by another company.
The patent was granted on December 31, 2011. The company estimated that the patent would provide an economic benefit to the company for five years. It is company policy not to amortize intangible assets in the year of acquisition.
a. Assume that Southern Robotics successfully defended its patent against the infringement.
(1) What amount should Southern Robotics report for this patent on the company's\ December 31, 2011, balance sheet?
(2) What amount should Southern Robotics report for this patent on the company's December 31, 2012, balance sheet?
(3) Prepare the entry to amortize the patent on December 31, 2012.
b. Assume that Southern Robotics was unsuccessful in defending its patent against the infringement.
(1) What amount should Southern Robotics report for this patent on the company's December 31, 2011, balance sheet?
(2) What amount should Southern Robotics report for this patent on the company's December 31, 2012, balance sheet?
(3) Prepare the entry to write off the patent.
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