Question

Current Attempt in Progress Pina Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Pina 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 Pina patent number 758-6002-1A is as follows. Date Activity Cost 2011-2012 Research conducted to develop precipitator $370,000 Jan. 2013 Design and construction of a prototype 88,000 Testing of models 70,000 March 2013 Jan. 2014 Fees pald engineers and lawyers to prepare patent application; patent granted June 30, 2014 68,000 Nov. 2015 Engineering activity necessary to advance the design of the precipitator to the manufacturing stage Dec 2016 Legal fees paid to successfully defend precipitator patent 95,000 70,000 71,000 April 2017 Research aimed at modifying the design of the patented precipitator July 2021 Legal fees paid in unsuccessful patent infringement suit against a competitor 35,000

Answer 1

29 Compute the carrying value of patent No. 758-6002-1A on each of the following dates: 31 $ (a) December 31, 2011 Costs to obtain patent, January, 2011 2011 Amortization Carrying value, December 31, 2011 68,000 (4,000 64,000 $ All costs incurred prior to January 2011 are related to research and development activities and were expensed as incurred in accordance with GAAP. 64,000 $ (4,000) (4,000) (b) December 31, 2015 January 1, 2012 carrying value of patent (From A) 2012 amortization 2013 amortization Subtotal Legal fees to defend patent December 2013 Carrying value, December 31, 2013 2014 amortization 2015 amortization Carrying Value, December 31, 2015 (8,000) 56,000 70,000 126,000 (9,000) (9,000)| $ (18,000) 108,000 The costs incurred in 2012 and 2014 are related to research and development activities and are expensed as incurred.

J1 I CAUCISCUS HILUII CU. 52 (C) $ 108,000 $ December 31, 2018 January 1, 2016 carrying value (from B) 2016 amortization 2017 amortization 2018 amortization Carrying value, December 31, 2018 (21,600)| (21,600) (21,600) (64,800) 43,200 $ The legal costs in 2018 were expensed because the suit was unsuccessful. --- 62