Question : Instructions Prepare the necessary entries to clear the Intangible Assets : 11619
Instructions Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2018, recording any necessary amortization and reflecting all balances accurately as of that date. (Ignore income tax effects.) P12-2 (LO1,2,4,5) EXCEL (Accounting for Patents) Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows.
Date Activity Cost
2008–2009 Research conducted to develop precipitator $384,000
Jan. 2010 Design and construction of a prototype 87,600
March 2010 Testing of models 42,000
Jan. 2011 Fees paid engineers and lawyers to prepare patent application; patent granted June 30, 2011 59,500
Nov. 2012 Engineering activity necessary to advance the design of the precipitator to the manufacturing stage 81,500
Dec. 2013 Legal fees paid to successfully defend precipitator patent 42,000
April 2014 Research aimed at modifying the design of the patented precipitator 43,000
July 2018 Legal fees paid in unsuccessful patent infringement suit against a competitor 34,000
Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2016, it revised its useful life estimate downward to 5 remaining years. Amortization is computed for a full year if the cost is incurred prior to July 1, and no amortization for the year if the cost is incurred after June 30. The company's year ends December 3.
Instructions Compute the carrying value of patent No. 758-6002-1A on each of the following dates:
(a) December 31, 2011. (b) December 31, 2015. (c) December 31, 2018.