During 2013, Sarasota Corporation spent $164,160 in research and development cos
ID: 2530947 • Letter: D
Question
During 2013, Sarasota Corporation spent $164,160 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 $36,720 related to the patent were incurred as of October 1, 2013.
Date
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Debit
Credit
2013
2013
2013
2014
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Date
Account Titles and Explanation
Debit
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2015
2015
2016
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Debit
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During 2013, Sarasota Corporation spent $164,160 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 $36,720 related to the patent were incurred as of October 1, 2013.
Explanation / Answer
Date Gneral Journal Debit Credit Oct-13 R and D Exp 164,160 Cash 164,160 Patent 36,720 Cash 36,720 Dec-13 Amortization Expense 918 Accumulated Amorization 918 36,720/10*3/12 Dec-14 Amortization Expense 3672 Accumulated Amorization 3672 36720/10 b 06/01/2015 Patent 28800 Cash 28800 12/31/2015 Amortization Expense 4418 Accumulated Amorization 2888+1530 4418 36720/10*5/12 = 1530 (36720-918-3672-1530+28800) = 59400 59400/12*7/12 =2888 12/31/2015 Amortization Expense 4950 Accumulated Amorization 4950 59400/12 c Patent Amortization Expense 25781 2017&2018 Patents 25781 (59400-2888-4950)/2
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