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F. Naz
F. Naz, Bachelor's Degree
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Experience:  Have completed B.COM and CA Finalist
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Margaret Avery Company from time to time embarks on a research

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Margaret Avery Company from time to time embarks on a research program when a special project seems to offer possibilities. In 2011, the company expends $325,000 on a research project, but by the end of 2011 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 2012, and a successful patent is obtained. The R&D costs to complete the project are $130,000. The administrative and legal expenses incurred in obtaining patent number(NNN) NNN-NNNN84 in 2012 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 2012.
(c) In 2013, the company successfully defends the patent in extended litigation at a cost of $47,200, thereby extending the patent life to December 31, 2020. What is the proper way to account for this cost? Also, record patent amortization (full year) in 2013.
(d) Additional engineering and consulting costs incurred in 2013 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.
Submitted: 4 years ago.
Category: Business and Finance Homework
Expert:  F. Naz replied 4 years ago.
Have a nice day

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Customer: replied 4 years ago.
Thank you for your help
But i don't understand how you came up with this

Amortization Patents Dr8300 Patents Cr8300
24000+47200-30800/8 = 21300

Please explain. How did you get the $8300

Expert:  F. Naz replied 4 years ago.
the cost of Patent was 24000 then amoritzation was recorded gpt $4800. thus at the end of year it wasNNN-NN-NNNN= 19200 then additional 47200 was spent which made 19200+47200 = 66400, the number of year upto 2020 became 8 years from the beginning of 2013, now divided 66400 by 8 = 66400/8 = 8300.