JE to Record R&D and Patent6. During 2010, Bills Corporation spent $170,000 in research...

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Accounting

JE to Record R&D and Patent
6. During 2010, Bills Corporation spent $170,000 in research anddevelopment costs. As a result, a new product called the New AgePiano was patented. The patent was obtained on October 1, 2010, andhad a legal life of 20 years and a useful life of 10 years. Legalcosts of $18,000 related to the patent were included as of October1, 2010.
(a) Prepare all journal entries in 2010 and 2011 as a result ofthe transactions above.
(b) On June 1, 2012, Bills spent $9,480 to successfullyprosecute a patent infringement suit. As a result, the estimate ofuseful life was extended to 12 years from June 1, 2012. Prepare alljournal entries required in 2012 and 2013.
(c) In 2014, Bills determined that a competitor’s product wouldmake the New Age Piano obsolete and the patent worthless byDecember 31, 2015. Prepare all journal entries required in 2014 and2015.

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Answer a Following entries will be made in 2010 Date Particulars Debit Credit 1Oct2010 Research and development expense 170000 Cash 170000 The above entry is made to expense the RD amount 1Oct2010 Patents 18000 Cash 18000 The above entry has been made to capitalize the legal costs The legal See Answer

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In: AccountingJE to Record R&D and Patent6. During 2010, Bills Corporation spent $170,000 in research and...JE to Record R&D and Patent6. During 2010, Bills Corporation spent $170,000 in research anddevelopment costs. As a result, a new product called the New AgePiano was patented. The patent was obtained on October 1, 2010, andhad a legal life of 20 years and a useful life of 10 years. Legalcosts of $18,000 related to the patent were included as of October1, 2010.(a) Prepare all journal entries in 2010 and 2011 as a result ofthe transactions above.(b) On June 1, 2012, Bills spent $9,480 to successfullyprosecute a patent infringement suit. As a result, the estimate ofuseful life was extended to 12 years from June 1, 2012. Prepare alljournal entries required in 2012 and 2013.(c) In 2014, Bills determined that a competitor’s product wouldmake the New Age Piano obsolete and the patent worthless byDecember 31, 2015. Prepare all journal entries required in 2014 and2015.