Blue Laboratories holds a valuable patent (No. 758-6002-1A) on a
precipitator that prevents certain types of air pollution. Blue
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 Blue patent number 758-6002-1A is as
follows.
Date |
Activity |
Cost |
||
---|---|---|---|---|
2011–2012 |
Research conducted to develop precipitator |
$368,000 | ||
Jan. 2013 |
Design and construction of a prototype |
87,800 | ||
March 2013 |
Testing of models |
47,600 | ||
Jan. 2014 |
Fees paid engineers and lawyers to prepare patent application; |
|||
patent granted June 30, 2014 |
61,200 | |||
Nov. 2015 |
Engineering activity necessary to advance the design of the |
|||
precipitator to the manufacturing stage |
95,000 | |||
Dec. 2016 |
Legal fees paid to successfully defend precipitator patent |
47,600 | ||
April 2017 |
Research aimed at modifying the design of the patented precipitator |
48,600 | ||
July 2021 |
Legal fees paid in unsuccessful patent infringement suit against a |
|||
competitor |
36,000 |
Blue assumed a useful life of 17 years when it received the initial
precipitator patent. On January 1, 2019, 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, 2014 |
$enter a dollar amount |
||
---|---|---|---|---|
(b) |
December 31, 2018 |
$enter a dollar amount |
||
(c) |
December 31, 2021 |
$enter a dollar amount |
(a) | December 31, 2014: | |
Costs to obtain patent, 2014 | 61200 | |
2014 amortization ($61200/17 years) | -3600 | |
Carrying value of patent, Dec. 31, 2014 | 57,600 | |
(b) | December 31, 2018: | $ |
Carrying value of patent, Jan. 1, 2015 | 57600 | |
2015 amortization | -3600 | |
2016 amortization | -3600 | |
50400 | ||
Legal fees paid to successfully defend patent, Dec. 2016 | 47600 | |
Carrying value of patent, Dec. 31, 2016 | 98000 | |
2017 amortization ($98000/14 years) | -7000 | |
2018 amortization | -7000 | |
Carrying value of patent, Dec. 31, 2018 | 84000 | |
(c) | December 31, 2021: | $ |
Carrying value of patent, Jan. 1, 2019 | 84000 | |
2019 amortization ($84000/5 years) | -16800 | |
2020 amortization | -16800 | |
2021 amortization | -16800 | |
Carrying value of patent, Dec. 31, 2021 | 33600 |
Blue Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of...
Bramble Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Bramble 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 Bramble patent number 758-6002-1A is as follows. Date Activity Cost 2011–2012 Research conducted to develop precipitator $376,000 Jan. 2013...
Martinez Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Martinez 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 Martinez patent number 758-6002-1A is as follows. Date Activity Cost 2011–2012 Research conducted to develop precipitator $382,000 Jan. 2013...
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 that it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells one of its patents. The history of Fields patent number 758-6002-1A is as follows. Date Activity 2011 – 2012 Research conducted to develop precipitator...
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...
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 $366,000 Jan. 2010...
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...
tion and reflecting all balances accurately as of that date. (Ignore income tax effects.) 2 3 P12-2 (Accounting for Patents) Choo Laboratories holds a valuable patent (No. 758-6002-1A) on a pre- cipitator that prevents certain types of air pollution. Choo 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...
During 2020, Starnes Corporation developed a patent. Starnes incurred the following costs related to the development of the patent: tests to perfect the use of the patent for production processes, $6,000; research costs in the research laboratory, $21,000; and depreciation on equipment (that has alternative future uses) used in developing the patent, $4,000. In addition, in late December 2020, the company incurred legal fees for the patent registration, $7,000. The expected life of the patent is 20 years. On September...
*Problem 9-05A a-c The intangible assets section of Riverbed Corporation’s balance sheet at December 31, 2022, is presented here. Patents ($75,200 cost less $8,000 amortization) $67,200 Copyrights ($39,500 cost less $24,500 amortization) 15,000 Total $82,200 The patent was acquired in January 2022 and has a useful life of 10 years. The copyright was acquired in January 2016 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2023. Jan. 2 Paid...
The intangible assets section of Blue Corporation’s balance sheet at December 31, 2022, is presented here. Patents ($73,200 cost less $7,400 amortization) $65,800 Copyrights ($37,000 cost less $24,500 amortization) 12,500 Total $78,300 The patent was acquired in January 2022 and has a useful life of 10 years. The copyright was acquired in January 2016 and also has a useful life of 10 years. The following cash transactions may have affected intangible assets during 2023. Jan. 2 Paid $36,000 legal costs...