Question

Exercise 12-16 Sheridan Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2016, the company expends $323,000 on a research project, but by the end of 2016 it is impossible to determine whether any benefit will be derived from it. The project is completed in 2017, and a successful patent is obtained. The R&D costs to complete the project are $113,000. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2017 total $16,600. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit To record research and development costs) To record legal and administrative costs) To record one year's amortization expense

Answer 1

Part-a)

	Particulars	Debit	Credit
1	Research & Development Expense	113,000
	Cash		113,000
2	Patents	16,600
	Cash		16,600
3	Amoritization Expense (16,600/5)	3,320
	Patents		3,320

Part-b)

4	Patents	44,800
	Cash		44,800
5	Amoritization Expense	7,260
	Patents		7,260
	[(16,600-3,320)/8] + [44,800/8]