Required information [The following information applies to the questions displayed below.] Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total $ 3,500,000 1,100,000 550,000 350,000 75,000 35,000 $ 5,610,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all costs of the patent. Management contends that the device represents an improvement the existing communication system of the satellite and, therefore, should be capitalized. 2. How much should Satellite Systems report as research and development expense in the income stateme Research and development expense

Required information [The following information applies to the questions displayed below.] Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total $ 3,500,000 1,100,000 550,000 350,000 75,000 35,000 $ 5,610,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all costs of the patent. Management contends that the device represents an improvement the existing communication system of the satellite and, therefore, should be capitalized. 2. How much should Satellite Systems report as research and development expense in the income stateme Research and development expense

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures:Basic research to develop the technology $ 3,900,000Engineering design work 1,180,000Development of a prototype device 590,000Testing and modification of the prototype 390,000Legal fees for patent application 79,000Legal fees for successful defense of the new patent 39,000Total $ 6,178,000During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized.Required:1. Which of the above costs should Satellite Systems capitalize to the Patent account in the balance sheet?2. Which of the above costs should Satellite Systems report as research and development expense in the income statement?3. What are the basic criteria…
Lara Company established a new machine for developed basketballs. As the machine is considered very advanced and valuable, the company had it patented. The following expenditures were incurred in developing and patenting the machine. (a) special equipment that was purchased to be used solely for development of the new machine ...................... $182,000 (b) salaries and outlying benefits for engineers and research scientists 17,100 (c) testing prototype ........................... 23,600 (d) Legal fees for filing for patent ................... 12,700 (e) Fees paid to government patent office ............... 2,500 (f) Drawings required by patent office to be filed with patent application .................................. 4,700 Lara Company has chosen to amortize the patent over its legal life. At the beginning of the second year, Lara Company paid $24,000 to successfully defend the patent in an infringement suit. At the beginning of…
2. ABC Enterprises Inc. developed a new machine for manufacturing baseballs. Because the machine is considered very valuable, the company had it patented. The following expenditures were incurred in developing and patenting the machine.(a) Purchases of special equipment to be used solely for the development of the new machine P182,000(b) Research salaries and fringe benefits for engineers and scientists 17,100(c) Cost of testing prototype 23,600(d) Legal costs for filing for a patent. 12,700(e) Fees paid to government patent office 2,500(f) Drawings required by the patent office to be filed with patent application 4,700ABC elected to amortize the patent over its useful life of 17 years. At the beginning of the second year, ABC Enterprises paid P24,000 to successfully defend the patent in an infringement suit. At the beginning of the fourth year, ABC determined that the remaining estimated useful life of the patent was five years. Determine the cost of the patent at the end of year 1.
The following costs are incurred by Everlasting Corporation in 2022: a. Cost of activities aiming new knowledge P150,000 b. Cost of developing and producing prototype model 30,000 c. Cost of seminars to introduce the newly develop product 120,000 d. Advertisement cost to introduce the newly develop product 60,000 e. Cost incurred for search of alternatives 35,000 f. Cost of final selection of possible alternatives 50,000 g. Cost of machine acquired to be used only in an R&D project 300,000 h. Cost of engineering follow through in an early phase of commercial production 50,000 i. Adaptation of an existing capability to particular customers need 36,000 j. Salaries of employees involved in R&D 480,000 k. Radical modification to the formulation of a chemical product 40,000 l. Laboratory…
You will enter the Topic, Subtopic, Section, Paragraph in a fill in the blank question and your overall conclusion to this case. Example: ASC 100-10-45-4 (you do not need to enter what the guidance content) Research Case #1: Chicago Corporation is building a new facility at a cost of $8 million dollars. Construction began in early January 2021 and will be completed by December 31, 2021. Chicago Corporation borrowed $6 million on January 5, 2021 for the construction of the facility and is using the funding from bonds issued in earlier years to assist in the remaining of the funding for the project. The CFO for Chicago Corporation recalls that interest may be capitalized for the project but is unsure of how to determine the correct amount of interest that the company may capitalize. Chicago Corporation has satisfied the criteria for the capitalization period during all of 2021. The total interest that the company incurred during 2021 that the company would have not incurred if the new…
) Constrictor developed a new machine for manufacturing baseballs. Because the machine is considered very valuable, the company had it patented. The following expenditures were incurred in developing and patenting the machine. Purchases of special equipment to be used solely for development of the new machine 1,820,000Research salaries and fringe benefits for engineers and scientists 171,000Cost of testing prototypes 236,000Legal costs for filing for patent 127,000Fees paid to government patent office 25,000Drawings required by patent office to be field with patent application 47,000Constrictor elected to amortize the patent over its legal life. At the beginning of the second year, Constrictor Enterprises paid P240,000 to successfully defend the patent in an infringement suit. At the beginning of the fourth year, Constrictor determined that the remaining estimated useful life of the patent was five years. The carrying amount of the patent at the end of fourth year is A. 135,320 B.…
1. Which of the following is a qualifying asset? * A. Building that is ready for its intended use upon purchase B. An application software (intangible asset) that takes 3 years to develop C. Investment property measured at fair value D. Inventories that are routinely produced in large quantities in continuous basis 2. In which of the following instances is the capitalization of borrowing costs under PAS 23 would most likely be suspended? * A. Construction is temporarily stopped for the curing of concrete. B. Active development is stopped to give time for the engineers to reevaluate a design flaw. C. The construction of a bridge is disrupted by troubled waters. D. The construction of a building is discontinued because it is condemned by the government. The resumption of development is uncertain. 3. On January 1, 20x1, Entity A obtained a 12% ₱6,000,000 loan, specifically to finance the construction of a building. The proceeds of the…
Treasure Land Corporation incurred the following costs in 2020. Cost of laboratory research aimed at discovery of new knowledge $120,000 Cost of testing in search for product alternatives 100,000 Cost of engineering activity required to advance the design of a product to the manufacturing stage 210,000 Prototype testing subsequent to meeting economic viability 75,000 $505,000 Prepare the necessary 2020 journal entry(ies) for Treasure Land.
Consider the following information from a company's records for 2020: Materials used in research and development projects $4,500 Equipment acquired that will have alternative future uses in future R&D projects for five years 1,500 Personnel costs of employees involved in R&D projects 5,500 Consulting fees paid to outsiders for R&D projects 2,800 Indirect costs reasonably allocable to R&D projects 250 Legal fees associated with registration of a patent resulting from a 2020 R&D project 2,500 Required:Compute the amount of R&D costs that should be classified as expenses in determining 2020 net income. $ _______
Tesla is under contract to Montgomery County for evaluating alternatives that use a robotic, liquid-propelled "pig" to periodically inspect the interior of buried potable water pipes for leakage, corrosion, weld strength, movement over time, and a variety of other parameters. Twc equivalent robot instruments are available. Robot Joeboy will have a first cost of P 4,590,000, annual M&O costs of P 1,620,000, and a P 2,160,000 salvage value after 3 years. Robot Watcheye will have a first cost of P 6,570,000, annual M&O costs of P 1,458,000, and a P 1,782,000 salvage value after its 5-year life. By how much is the difference in the future worth of two robot instrument if interest rate is 13%?
Metal Recycling and Salvage receives the opportunity to salvage scrap metal and other materials from an old industrial site. The current owners of the site will sign over the site to Enviro at no cost. Enviro intends to extract scrap metal at the site for 24 months and then will clean up the site, return the land to useable condition, and sell it to a developer. Projected costs associated with the project follow: Read the requirements2. Requirement 1. Assuming that Enviro expects to salvage 70,000tons of metal from the site, what is the total project life cycle cost? Total Life-Cycle Costs Variable costs: Metal extraction and processing Fixed costs: Metal extraction and processing Rent on temporary buildings Administration Clean-up Land restoration Selling land Total life-cycle cost Requirement 2. Suppose Enviro can sell the metal for $110 per ton and wants to earn a…
The international environmental management standard ISO 14000 requires that Oliver, the pollution control officer of BUCENG, must install suitable pollution control equipment. He is considering two of them, one based on the principle of neutralization and the other of precipitation. They cost Php 7,500,000 and Php 4,500,000 respectively; both are expected to last 5 years and have salvage values of Php 1,500,000 and Php 1,050,000 respectively. The chemical needed for the neutralization-based equipment costs Php 500,000 per year, while for the other Php 950,000 per year. Their annual maintenance costs are Php 5,000 and Php 7,500 respectively. Develop a cashflow table to help Oliver visually compare the data pertaining to the two alternatives.