Question

During 2015, Carla Vista Company purchased a building site for its proposed research and development laboratory at a cost of $63,000. Construction of the building was started in 2015. The building was completed on December 31, 2016, at a cost of $440,000 and was placed in service on January 2, 2017. The estimated useful life of the building for depreciation purposes was 20 years. The straight-line method of depreciation was to be employed, and there was no estimated residual value.

Management estimates that about 50% of the projects of the research and development group will result in long-term benefits (i.e., at least 10 years) to the corporation. The remaining projects either benefit the current period or are abandoned before completion. A summary of the number of projects and the direct costs incurred in conjunction with the research and development activities for 2017 appears below.

		Number of Projects		Salaries and Employee Benefits		Other Expenses (excluding Building Depreciation Charges)
Completed projects with long-term benefits		15		$82,000		$41,000
Abandoned projects or projects that
benefit the current period		10		70,000		13,000
Projects in process—results indeterminate		5		36,000		10,000
Total		30		$188,000		$64,000

Upon the recommendation of the research and development group, Carla Vista Company acquired a patent for manufacturing rights at a cost of $64,000. The patent was acquired on April 1, 2016, and has an economic life of 10 years.

If generally accepted accounting principles were followed, how would the items above relating to research and development activities be reported on the following financial statements?

The company's income statement for 2017. (Do not round intermediate calculations and round final answer to O decimal places, e.g. 5,275.) Carla Vista Company Income Statement (Partial) Research and Development Expenses Amortization of Patent 64000 LINK TO TEXT The company's balance sheet as of December 31, 2017. (Do not round intermediate calculations and round final answer to 0 decimal places, e.g. 5,275.) Carla Vista Company Balance Sheet (Partial) December 31, 2017 Land 63000 Building-Net Patent-Net

Answer 1

ANSWER :-

(a)

Income statement (Items and amounts) for the year ended December 31, 2017
R & D expenses*	$274,000
Amortization of patent ($64,000/10 years)	$6,400

Calculation of R & D expenses

Depreciation on building ($440,000/20 years)	$22,000
Salaries and employee benefits	$188,000
Other expenses	$64,000
Total	$274,000(

(b)

Balance Sheet (Items and amounts) for the year ended December 31, 2017
Land	$63,000
Building ($440,000-$22,000)	$3418,000
Patent ($64,000-$11,200)	$52,800

Calculation of R & D patents

([$64,000/10]*3/4) + ($64,000/10) = $11,200

_______________________________________________

if you have any query please ask me in comment box i am here to helps you don't give direct Thumbs down.if you satisfied my work give Thumbs UP

                                                *****THANK YOU******