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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.
(c) In 2015, the company successfully defends the patent in extended
litigation at a cost of $47,200, thereby extending the patent life to
December 31, 2022.
(d) Additional engineering and consulting costs incurred in 2015
required to advance the design of a product to the manufacturing
stage total $60,000.
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