Kingbird Industries has the following patents on its December 31, 2024, balance sheet. Patent Item Initial...

Transcribed Image Text:

Kingbird Industries has the following patents on its December 31, 2024, balance sheet. Patent Item Initial Cost Date Acquired Useful Life at Date Acquired Patent A $44,676 3/1/21 17 years Patent B $17,280 7/1/22 10 years Patent C $23,520 9/1/23 4 years The following events occurred during the year ended December 31, 2025. 1. Research and development costs of $249,000 were incurred during the year. 2. Patent D was purchased on July 1 for $46,512. This patent has a useful life of 9/2 years. 3. As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B's value may have occurred at December 31, 2025. The controller for Kingbird estimates the expected future cash flows from Patent B will be as follows. Year Expected Future Cash Flows 2026 $1,850 2027 1,850 2028 1,850 The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year.) Kingbird Industries has the following patents on its December 31, 2024, balance sheet. Patent Item Initial Cost Date Acquired Useful Life at Date Acquired Patent A $44,676 3/1/21 17 years Patent B $17,280 7/1/22 10 years Patent C $23,520 9/1/23 4 years The following events occurred during the year ended December 31, 2025. 1. Research and development costs of $249,000 were incurred during the year. 2. Patent D was purchased on July 1 for $46,512. This patent has a useful life of 9/2 years. 3. As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B's value may have occurred at December 31, 2025. The controller for Kingbird estimates the expected future cash flows from Patent B will be as follows. Year Expected Future Cash Flows 2026 $1,850 2027 1,850 2028 1,850 The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year.)