Question: In 2014 Inventors Corp spent 392 000 on a research project

In 2014, Inventors Corp. spent $392,000 on a research project, hut by the end of 2014 it was impossible to determine whether any benefit would come from it. Inventors prepares financial statements in accordance with IFRS.
(a) What account should be charged for the $392,000, and how should it he shown in the financial statements for fiscal2014?
(b) T he research project is completed in 2015, and a successful patent is obtained. The research phase costs to complete the project are $71,000. The administrative and legal expenses incurred in obtaining patent number 481-7 61 - 0092 on January 3, 2015, total S10,000. The patent has an expected useful life of five years. Inventors Corp. will now begin investigating applications that use or apply the knowledge obtained on this project. Record these costs in journal entry form. Also, record patent amortization for a full year in 2015.
(c) In January 2016, the company successfully defended the patent in litigation at a cost of $12,400. The victory extended the patent's life to December 31, 2023. What is the proper way to account for this cost? Also, record patent amortization for a full year in 2016.
(d) By early September 2016, and at an additional cost of $101,000, Inventors Corp. had a product design that was technologically and financially feasible. Additional engineering and consulting costs of $66,000 were incurred in October 2016 to advance the design of the new product to the manufacturing stage. Discuss the proper accounting treatment for the 2016 costs incurred.

Sale on SolutionInn
  • CreatedSeptember 18, 2015
  • Files Included
Post your question