Question 16 (3 points) Day Company purchased a patent on January 1, 2012 for $60

Question

Question 16 (3 points)

Day Company purchased a patent on January 1, 2012 for $600,000. The patent had a remaining useful life of 10 years at that date. In January of 2013, Day successfully defends the patent at a cost of $270,000, extending the patent's life to 12/31/24. What amount of amortization expense would Kerr record in 2013?

Question 16 options:

$60,000

$67,500

$72,500

$90,000

Question 17 (3 points)

Riley Co. incurred the following costs during 2013:

Significant modification to the formulation of a chemical product

$160,000

Trouble-shooting in connection with breakdowns during commercial production

$150,000

Cost of exploration of new formulas

$200,000

Seasonal or other periodic design changes to existing products

$185,000

Laboratory research aimed at discovery of new technology

$275,000

In its income statement for the year ended December 31, 2013, Riley should report research and development expense of ____________.

Question 17 options:

$635,000

$785,000

$820,000

$970,000

Question 18 (3 points)

Tripiani Inc. incurred $800,000 of capitalizable costs to develop computer software during 2012. The software will earn total revenues over its 5-year life as follows: 2012 - $500,000; 2013 - $600,000; 2014 - $600,000; 2015 - $200,000; and 2016 - $100,000. What amount of the computer software costs should be expensed in 2012?

Question 18 options:

$200,000

$160,000

$180,000

$266,667

Question 19 (3 points)

Tripiani Inc. incurred $900,000 of capitalizable costs to develop computer software during 2012. The software will be used internally over its 5-year life. What amount of the computer software costs should be expensed in 2012?

Question 19 options:

$900,000

$180,000

$202,500

$300,000

Question 20 (3 points)

In January, 2008, Findley Corporation purchased a patent for a new consumer product for $960,000. At the time of purchase, the patent was valid for fifteen years. Due to the competitive nature of the product, however, the patent was estimated to have a useful life of only ten years. During 2013 the product was permanently removed from the market under governmental order because of a potential health hazard present in the product. What amount should Findley charge to expense during 2013, assuming amortization is recorded at the end of each year?

Question 20 options:

$640,000

$480,000

$96,000

$64,000

$60,000

$67,500

$72,500

$90,000

Explanation / Answer

Dear student, only one question is allowed at a time. I am answering the first question

Amortization expenses of patent for 2012

= Cost of purchase / Useful life

= $600,000 / 10

= $60,000

Balance remaining in patent account as on 31.12.2012

= Cost – Amortization

= $600,000 - $60,000

= $540,000

Costs incurred in defending patent are capitalized with patent costs

So, Revised costs

= Closing value of patent as on 31.12.2012 + Cost incurred for defending

= $540,000 + $270,000

= $810,000

Original useful life period

= January 1, 2012 to December 31, 2021

= 10 years

Revised useful life

= January 1, 2013 to December 31, 2024

= 12 years

So, amortization for 2013

= Revised cost / Revised useful life

= $810,000 / 12

= $67,500

So, as per above calculations, option B is the correct option

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