Sheridan Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, thecompany expends $323,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will bederived from it.(b)The project is completed in 2020, and a successful patent is obtained. The R&D costs to complete the project are $113,000. Theadministrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2020 total $16,000. The patent has anexpected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2020.(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry"for the account titles and enter O for the amounts.) The project is completed in 2020, and a successful patent is obtained. The R&D costs to complete the project are $113,000. Theadministrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2020 total $16,000. The patent has anexpected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2020.(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry"for the account titles and enter O for the amounts.)Account Titles and Explanation(To record research and development costs)(To record legal and administrative costs)(To record one year's amortization expense)DebitCredit10.00

The research and development cost incurred on a research product is expenses in the period it…

Sheridan Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $323,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it. (b) The project is completed in 2020, and a successful patent is obtained. The R&D costs to complete the project are $113,000. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2020 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 2020.

Sheridan Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $323,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it. (b) The project is completed in 2020, and a successful patent is obtained. The R&D costs to complete the project are $113,000. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2020 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 2020.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter5: Business Deductions

Section: Chapter Questions

Problem 29P

See similar textbooks

Similar questions

On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
Sandhill Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $324,500 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it. (b) The project is completed in 2020, and a successful patent is obtained. The R&D costs to complete the project are $114,500. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2020 total $17,250. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit (To record research and development costs) (To record legal and administrative costs)
Cullumber Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $321,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it. 1). The project is completed in 2020, and a successful patent is obtained. The R&D costs to complete the project are $111,000. The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2020 total $16,250. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2020. 2). In 2021, the company successfully defends the patent in extended litigation at a cost of $41,600, thereby extending the patent life to December 31, 2028. What is the proper way to account for this cost? Also, record patent amortization (full year) in 2021.
Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2018, the company expends $325,000 on a research project, but by the end of 2018, it is impossible to determine whether any benefit will be derived from it. 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 2019, and a successful patent is obtained. The R&D costs to complete the project are $130,000 ($36,000 of these costs were incurred after achieving economic viability). The administrative and legal expenses incurred in obtaining patent number 472-1001-84 in 2019 total $24,000. The patent has an expected useful life of 5 years. Record these costs in journal entry form. Also, record patent amortization (full year) in 2019. c. In 2020, the company successfully defends the patent in extended litigation at a cost of $47,200, thereby extending the patent life to December…
Sheridan Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $323,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it.
Price Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $325,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it. What account should be charged for the $325,000, and how should it be shown in the financial statements? Additional engineering and consulting costs incurred in 2021 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.
Micropolis Technology began a new development project in 2020. The project reached technological feasibility on September 1, 2021, and was available for release to customers at the beginning of 2022. Development costs incurred prior to September 1, 2021, were $4,560,000, and costs incurred from June 30 to the product release date were $1,920,000. The 2022 revenues from the sale of the new software were $3,950,000, and the company anticipates additional revenues of $11,850,000. The economic life of the software is estimated at three years. Amortization of the software development costs for the year 2022 would be:
Price Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2019, the company expends $325,000 on a research project, but by the end of 2019 it is impossible to determine whether any benefit will be derived from it. What account should be charged for the $325,000, and how should it be shown in the financial statements?
Sandstorm Corporation decides to develop a new line of paints. The project begins in 2018. Sandstorm incurs the following expenses in 2018 in connection with the project:Salaries: $85,000Materials: $30,000Depreciation on equipment: $12,500The benefits from the project will be realized starting in July 2019. If an amount is zero, enter "0".If Sandstorm Corporation elects a 60-month deferral and amortization period, there is a $ for 2018 and a $ deduction for 2019.
During 2019, Latte Inc., spent P5,000,000 developing its new "Hyperion" software package. Of this amount, P2,200,000 was spent before technological feasibility was established for the product, which is to be marketed to third parties. The package was completed at December 31, 2019. Latte expects a useful life of 8 years for this product with total revenues of P16,000,000. During the first year (2020), Latte realizes revenues of P3,200,000 a. What journal entries should have been prepared by the accountant in 2019 for the foregoing facts? b. Prepare the entry to record amortization at December 31, 2020
Alexandria Company started a research and development project on a new product on January 1, 2021. Total cost incurred before reaching technological feasibility amounted to P4,000,000 while development cost after reaching technological feasibility amounted to P5,000,000 before year-end. Prior to commercial production, the entity paid legal and registration fees amounting to P1,000,000 in filing for a patent on the new product on July 1, 2021. Early in January 2022, an additional amount of P2,000,000 was incurred to develop the project to full manufacturing stage. The patent was approved in early January 2022 and valid for 20 years. However, the entity expected technological advancements will render the new product virtually obsolete by December 31, 2026. The entity decided to account separately any capitalized development cost. 1. What amount should be capitalized as cost of patent? a. 1,000,000 b. 6,000,000 c. 7,000,000 d. 5,000,000 2. What amount should be capitalized as development…
Power Company incurred P3,000,000 (P800,00 in 2019 and P2,200,000 in 2020) to develop a computer software product. P1,000,000 of this amount was expended before technological feasibility was established in early 2020. The product will earn future revenues of P8,000,000 over its 5-year life, as follows: 2020-P2,000,000; 2021-P2,000,000; 2022-P1,600,00; 2023-P1,600,000; and 2024-P800,000.Required:1. What is the amount of development cost that will be capitalized?2. What is the amortization expense based on the expected revenue ratio?