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Instructions Prepare the necessary entries to clear the Intangible Assets

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.

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