During 2013, Indigo Corporation spent $172,800 in research and development costs
ID: 2408147 • Letter: D
Question
During 2013, Indigo Corporation spent $172,800 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2013, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $45,360 related to the patent were incurred as of October 1, 2013.
Date
Account Titles and Explanation
Debit
Credit
2013
2013
2013
2014
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Date
Account Titles and Explanation
Debit
Credit
2015
2015
2016
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Account Titles and Explanation
Debit
Credit
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During 2013, Indigo Corporation spent $172,800 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2013, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $45,360 related to the patent were incurred as of October 1, 2013.
Explanation / Answer
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2013 Research and Development Expenses $172,800 To Cash $172,800 (To record research and development expenses) 2013 Patents $45,360 To Cash $45,360 (To record legal expenses) 2013 Amortization Expenses 1134.00 To Accumulated Amortization-Patents 1134.00 (Amortisation Expense = $45360/10*3/12) 2014 Amortization Expense To Accumulated Amortization Patents 4536 (Amortization expense =$45360/10) 4536 2015 Patents $37,440 To Cash $37,440 (To Record patents) 2015 Amortization Expense $5,548 To Accumulated Amortisation -Patents $5,548 (Amortizationi expense = ($45,360/10)*5/12+($45,360-$1,134-$4,536-$1,890+$37,440)/12*7/12) 2016 Amortization Expense $6,270 to Accumulated Amortization - Patents $6,270 (Amortisation = $45,360-$1,134-$4,538-$1,890+$37,440)/12) Amortization Expense $32,656 To Accumulated Amortization Patents $32,656 Amortization = (75240-3657.5-6270)/2Related Questions
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