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jessnolonger
jessnolonger
28.11.2019 • 
Business

Leontyne price company from time to time embarks on a research
program when a special project seems to offer possibilities. in 2006 the company expends $325,000
on a research project, but by the end of 2006 it is impossible to determine whether any benefit will be derived
from it.
instructions
(a) what account should be charged for the $325,000, and how should it be shown in the financial
statements?
(b) the project is completed in 2007, and a successful patent is obtained. the r& d costs to complete
the project are $110,000. the administrative and legal expenses incurred in obtaining patent number
472-1001-84 in 2007 total $16,000. the patent has an expected useful life of 5 years. record
these costs in journal entry form. also, record patent amortization (full year) in 2007.
(c) in 2008, the company successfully defends the patent in extended litigation at a cost of $47,200,
thereby extending the patent life to december 31, 2015. what is the proper way to account for
this cost? also, record patent amortization (full year) in 2008.
(d) additional engineering and consulting costs incurred in 2008 required to advance the design of
a product to the manufacturing stage total $60,000. these costs enhance the design of the product
considerably. discuss the proper accounting treatment for this cost.

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