AC 302 CHAPTER 12 PROBLEM QUESTION 2

AC 302 CHAPTER 12 PROBLEM QUESTION 2
Name				Date		
Instructor				Course		
Intermediate Accounting 14th Edition by Kieso Weygandt and Warfield						
Primer on Using Excel in Accounting by Rex A Schildhouse						
						
P12-2 (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:
	2003-2004	Research conducted to develop precipitator				$384,000 
	Jan. 2005	Design and construction of a prototype				87,600 
	March 2005	Testing of models				42,000 
	Jan. 2006	"Fees paid engineers and lawyers to prepare patent
      application; patent granted June 30, 2006"				59,500 
						
	Nov. 2007	"Engineering activity necessary to advance the design
      of the precipitator to the manufacturing stage"				81,500 
						
	Dec. 2008	"Legal fees paid to successfully defend precipitator
      patent"				42,000 
						
	April 2009	"Research aimed at modifying the design of the
      patented precipitator"				43,000 
						
	July 2013	"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, 2011, 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 31.						
						
						
Instructions:						
(a) Compute the carrying value of patent No. 758-6002-1A on December 31, 2006.						
						
	Costs to obtain patent Jan. 2006				Amount	
	Text title				Amount	
	Text title				Formula	
						
						
						
						
						
(b) Compute the carrying value of patent No. 758-6002-1A on December 31, 2010.						
						
	Carrying value of patent, Jan. 1, 2007				Formula	
	Text title			Formula		
	Text title			Formula	Formula	
					Formula	
	Legal fees to defend patent Dec. 2008				Amount	
	Text title				Formula	
	Text title			Formula		
	Text title			Formula	Formula	
	Text title				Formula	
						
Text answer as appropriate.						
						
						
						
(c) Compute the carrying value of patent No. 758-6002-1A on December 31, 2013.						
						
	Carrying value Jan. 1, 2011				Amount	
	Text Title			Formula		
	Text Title			Formula		
	Text Title			Formula	Formula	
	Text Title				Formula	
						
Text answer as appropriate.