Chen King Enterprises Inc. developed a new machine that reduces the time required to insert the fortunes
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Research and development laboratory expenses . . . . . . . . . . . . . $25,000
Metal used in the construction of the machine . . . . . . . . . . . . . . . . 8,000
Blueprints used to design the machine . . . . . . . . . . . . . . . . . . . . . . . 3,200
Legal expenses to obtain patent . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000
Wages paid for the employees’ work on the research, development, and building of the machine (60% of the time was spent in actually building the machine) . . . . . 30,000
Expense of drawing required by the patent office to
be submitted with the patent application . . . . . . . . . . . . . . . . . . . 1,700
Fee paid to government patent office to process application . . . . . . . . . . . . 2,500
One year later, Chen King Enterprises Inc. paid $17,500 in legal fees to successfully defend the patent against an infringement suit by Dragon Cookie Co.
Give the entries on Chen King’s books indicated by the preceding events. Ignore any amortization of the patent or depreciation of the machine.
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Related Book For
Intermediate Accounting
ISBN: 978-0324312140
16th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
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