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 $372,000 Jan. 2013 Design and construction of a prototype 88,000 March 2013 Testing of models 57,400 Jan. 2014 Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2014 66,300 Nov. 2015 Engineering activity necessary to advance the design of the precipitator to the manufacturing stage 81,500 Dec. 2016 Legal fees paid to successfully defend precipitator patent 57,400 April 2017 Research aimed at modifying the design of the patented precipitator 58,400 July 2021 Legal fees paid in unsuccessful patent infringement suit against a competitor 33,000 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 (b) December 31, 2018 (c) December 31, 2021
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 $372,000 Jan. 2013 Design and construction of a prototype 88,000 March 2013 Testing of models 57,400 Jan. 2014 Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2014 66,300 Nov. 2015 Engineering activity necessary to advance the design of the precipitator to the manufacturing stage 81,500 Dec. 2016 Legal fees paid to successfully defend precipitator patent 57,400 April 2017 Research aimed at modifying the design of the patented precipitator 58,400 July 2021 Legal fees paid in unsuccessful patent infringement suit against a competitor 33,000 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 (b) December 31, 2018 (c) December 31, 2021
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter10: Long-lived Tangible And Intangible Assets
Section: Chapter Questions
Problem 3Q
Related questions
Question
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
|
$372,000 | ||
|
Jan. 2013
|
Design and construction of a prototype
|
88,000 | ||
|
March 2013
|
Testing of models
|
57,400 | ||
|
Jan. 2014
|
Fees paid engineers and lawyers to prepare patent application;
|
|||
|
patent granted June 30, 2014
|
66,300 | |||
|
Nov. 2015
|
Engineering activity necessary to advance the design of the
|
|||
|
precipitator to the manufacturing stage
|
81,500 | |||
|
Dec. 2016
|
Legal fees paid to successfully defend precipitator patent
|
57,400 | ||
|
April 2017
|
Research aimed at modifying the design of the patented precipitator
|
58,400 | ||
|
July 2021
|
Legal fees paid in unsuccessful patent infringement suit against a
|
|||
|
competitor
|
33,000 |
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
|
|
||
|---|---|---|---|---|
| (b) |
December 31, 2018
|
|
||
| (c) |
December 31, 2021
|
|
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 4 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you