Laboratories holds a valuable patent (No. 1122098) on a device that prevents certain types of air pollution. Kaboom does not manufacture or sell the products and processes it develops; it conducts research and develops products, which it patents, and then assigns the patents to manufacturers on a royalty basis. The history of Patent No. 1122098 is as follows: Date Activity Cost 20x1-20x2 Research conducted to develop device P1,259,100 Jan. 20x3 Design and construction of a prototype 262,800 Mar. 20x3 Testing of models 126,000 Jan. 20x4 Legal and other fees to process patent application; patent granted June 20x4 186,150 Nov. 20x5 Engineering activity necessary to advance the design of the device to the manufacturing stage 244,500 April 20x7 Research aimed at modifying the design of the patented device 129,000 May 20x8 Legal fees paid in a successful patent infringement suit against a competitor 102,000 Kaboom assumed a useful life of 17 years when it received the initial device patent. On January 1, 20x9, it revised its useful life estimate downward to five (5) 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. Kaboom’s reporting date is December 31, 2x11. Compute the carrying value of Patent No. 1122098 on each of the following dates: 1. December 31, 20x4 ____________ 2. December 31, 20x8 ____________ 3. December 31, 2x11 ____________
Laboratories holds a valuable patent (No. 1122098) on a device that prevents certain types of air
pollution. Kaboom does not manufacture or sell the products and processes it develops; it conducts
research and develops products, which it patents, and then assigns the patents to manufacturers on a
royalty basis. The history of Patent No. 1122098 is as follows:
Date Activity Cost
20x1-20x2 Research conducted to develop device P1,259,100
Jan. 20x3 Design and construction of a prototype 262,800
Mar. 20x3 Testing of models 126,000
Jan. 20x4 Legal and other fees to process patent application; patent granted June
20x4
186,150
Nov. 20x5 Engineering activity necessary to advance the design of the device to the
manufacturing stage
244,500
April 20x7 Research aimed at modifying the design of the patented device 129,000
May 20x8 Legal fees paid in a successful patent infringement suit against a
competitor
102,000
Kaboom assumed a useful life of 17 years when it received the initial device patent. On January 1, 20x9, it revised its useful life estimate downward to five (5) 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. Kaboom’s reporting date is December 31, 2x11.
Compute the carrying value of Patent No. 1122098 on each of the following dates:
1. December 31, 20x4 ____________
2. December 31, 20x8 ____________
3. December 31, 2x11 ____________
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