ABC Co. made expenditures for the following: Cost in activities aimed at obtaining new knowledge ₱10,000 Marketing research to study consumer tastes 5,000 Cost of developing and producing a prototype model 3,000 Cost of testing the prototype model for safety and environmental friendliness 40,000 Cost revising designs for flaws in the prototype model 15,000 Salaries of employees, consultants, and technicians involved in R&D 20,000 Cost of conference for the introduction of the newly developed product including fee of amodel hired as endorser 100,000 Advertising to establish recognition of the newly developed product 30,000. How much is recognized as research and development expense? a. 68,000 b. 72,000 c. 88,000 d. 94,000

ABC Co. made expenditures for the following: Cost in activities aimed at obtaining new knowledge ₱10,000 Marketing research to study consumer tastes 5,000 Cost of developing and producing a prototype model 3,000 Cost of testing the prototype model for safety and environmental friendliness 40,000 Cost revising designs for flaws in the prototype model 15,000 Salaries of employees, consultants, and technicians involved in R&D 20,000 Cost of conference for the introduction of the newly developed product including fee of amodel hired as endorser 100,000 Advertising to establish recognition of the newly developed product 30,000. How much is recognized as research and development expense? a. 68,000 b. 72,000 c. 88,000 d. 94,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 7RE

See similar textbooks

Similar questions

Matt Lab Berhad's main activities are research and development. Currently, it develops a chemical formula for cleaning materials. The prototype is near completion. The cost of the project is as follows: Cost of Materials: RM250,000 Consultant Fees: RM75,000 Fees to register trade design: RM15,000 Selling and administrative cost allocated: RM78,000 Training cost to operate assets: RM36,000 Depreciation of Equipment: RM20,000 Required: Determine the cost of the development project that should be capitalized. Select one: O a. RM340,000 Ob. RM360,000 OC RM474.000 d. RM396.000
Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures:Basic research to develop the technology $ 3,900,000Engineering design work 1,180,000Development of a prototype device 590,000Testing and modification of the prototype 390,000Legal fees for patent application 79,000Legal fees for successful defense of the new patent 39,000Total $ 6,178,000During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized.Required:1. Which of the above costs should Satellite Systems capitalize to the Patent account in the balance sheet?2. Which of the above costs should Satellite Systems report as research and development expense in the income statement?3. What are the basic criteria…
The following costs are incurred during the research and development phases of a laser bone scanner Laboratory research aimed at discovery of new knowledge $800,000Search for application of new research findings 400,000Salaries of research staff designing new laser bone scanner 1,200,000Material, labor and overhead costs of prototype laser scanner 850,000Costs of testing prototype and design modifications 450,000Engineering costs incurred to advance the laser scanner to full production stage (technological feasibility reached) 700,000 Identify which of these are development phase items and will be immediately expensed under GAAP and IFRS. GAAP IFRS $1,200,000 $1,200,000 $2,400,000 $1,400,000 $2,400,000 $2,500,000 $3,200,000 $2,500,000
In 2018, Space Technology Company modified its model Z2 satellite to incorporate a new communication device.The company made the following expenditures:Basic research to develop the technology $2,000,000Engineering design work 680,000Development of a prototype device 300,000Acquisition of equipment 60,000Testing and modification of the prototype 200,000Legal and other fees for patent application on the new communication system 40,000Legal fees for successful defense of the new patent 20,000Total $3,300,000The equipment will be used on this and other research projects. Depreciation on the equipment for 2018 is $10,000.During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized.Required:Prepare correcting entries that reflect the…
If a company undertakes a quality improvement program, it would spend an additional $370,000 on raw materials inspection and an additional $250,000 on finish goods inspection. This quality improvement program would save the company $410,000 in rework. What would be the cost or savings of undertaking this quality improvement program? OA. $1,030,000 in additional costs OB. $210,000 in additional costs OC. $210,000 in savings OD. $1,030,000 in savings
A manufacturer incurs the following costs: $38,000 developing new techniques that will be put in place shortly to cut production costs; $27,000 researching a new process to improve the quality of the standard product and $8,000 on market research into the commercial viability of a new type of product. It is company policy to capitalise costs whenever permitted by IAS 38 Intangible Assets. 9.7 How much should be charged as research and development expenditure in profit or loss? (ignore amortisation) $73,000 $35,000 $27,000 $38,000 A 229ni2ud a yde C BPP EARNING MEDIA
During the current year, Beta Company incurred the following costs related to a new solar-powered car: Salaries of laboratory employees researching how to build the new car 2,500,000 200,000 Legal fees for the patent application for the new car Engineering follow-up during the early stage of commerical production during the current year Marketing research to promote the new car Design, testing and construction of a prototype 500,000 300,000 4,000,000 What amount should be reported as research and development expense? a. 7,500,000 b. 6,500,000 C. 2,500,000 d. 7,200,000
Mix ‘Em Up engages in research to develop cures for famous diseases. Costs incurred during development of one such project are as shown below: Researchers’ wages $10,000 Materials used in research 5,000 Machinery used in research 700 Registration of product discovered 1,950 Attorney’s fees for registration 3,000 Record the journal entry for these items. Assume we credit Cash
Brill Company made the following expenditures during the current year: Costs to develop computer software for internal use in Brill’s general management information system: 1 000 000 Cost of market research activities 750 000 How much Brill Company's expense?
Required: Prepare General Journal entries to record the Expense to R& Development ; Capitalization of Equipment and Patent.
NhyiraCapital Limited began research into the software it has used over a period. The software has been operational for the generation of economic benefits over the years. The company decided to research the development of the software. The company assigned four researchers who were paid R10,000 in total for the period of the research. Transportation and feeding costs incurred in carrying out the research amounted to R4,000. The company further acquired four tablets with research software for R25,000 each to enable them to ascertain accurate findings.The company’s software is separately identified and has a commercial value. The research was completed and there is a need for developing the company’s software. A development cost of R125,000 was reliably measured and incurred. The economic useful life of the software was estimated to be 10 years from the date of completing its development. Show how the software and its related expenses are to be capitalized in the financial statements…
Organic Laboratories allocates research and development costs to its three research facilities based on each facility's total annual revenue from new product developments: Facility location Kentucky Arizona Illinois Total New product revenue $ 66,000,000 $ 100,000,000 $ 84,000,000 $ 250,000,000 Research & Development $ 60,000,000 Using revenue as an allocation base, the amount of costs allocated to the Arizona research facility is calculated to be: Multiple Choice $18,000,000. $30,000,000. $36,000,000. $34,000,000. $24,000,000.