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E12-5 (Correct Intangible Assets Account) As the recently
appointed auditor for William J. Bryan Corporation, you have been
asked to examine selected accounts before the 6-month financial
statements of June 30, 2014, are prepared. The controller for
William J. Bryan Corporation mentions that only one account is
kept for intangible assets. The account is shown below.
E12-16 (Accounting for R&D Costs) Leontyne Price Company from
time to time embarks on a research pro- gram when a special
project seems to offer possibilities.
In 2013, the company expends $325,000 on a research project, but
by the end of 2013 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 2014, and a successful patent is
obtained. The R&D costs to complete the project are $110,000.