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 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		$388,000
Jan. 2010		Design and construction of a prototype		86,000
March 2010		Testing of models		29,400
Jan. 2011		Fees paid engineers and lawyers to prepare patent application;
		patent granted June 30, 2011		66,300
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		29,400
April 2014		Research aimed at modifying the design of the patented precipitator		30,400
July 2018		Legal fees paid in unsuccessful patent infringement suit against a
		competitor		36,000

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		$

Answer 1

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Valwe dPatent on Decemben 3), 2015 CArPuging Cempute the Particularz Amount Carnytng Valve m Janu ol, 2012 62400 3900) Amortzaton 2012- ( 66300/1a yan) Amotitzaction201s (66300/1yury) Legal fee to dejand 3900) २१4०० 84000 Total (GooD) AmortizatHon o204 (84000/14yn Amertizethon of2015 (s4000/14Y Goo) Camugfing Valwe १२००० AlL cost ncurred in 2-012 and 20l are relatd to usearch and dvelpment actute and were expensed as Tnuoed Valwe Compote the can Patent on Decamber 31,2018 Partiedars Amount Value on anua 01,2010 Caomruging AmartizatHten 2016 (a2000/5ya) Ameti gatfiom o 2012a (700/ 5yer Ammtizndton2018 (4200/ 5 yesas) LArDuLing 72000 (4400) (uo) (440) 28800 ب ۷سله wre expensed hicauge but was ungvcesjul The hgal Cost in 2019