Dean Lang Enterprises Inc. developed a new machine that reduces the time required to insert the fortunes
Question:
Dean Lang Enterprises Inc. developed a new machine that reduces the time required to insert the fortunes into its fortune cookies. Because the process is considered very valuable to the fortune cookie industry, Dean Lang patented the machine. The following expenses were incurred in developing and patenting the machine:
Research and development laboratory expenses . . . . . . . . . . . . . . . . . . . . . . . $34,000
Metal used in the construction of the machine . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
Blueprints used to design the machine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,600
Legal expenses to obtain patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,400
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) . 42,000
Expense of drawing required by the patent office to be submitted with
the patent application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
Fee paid to government patent office to process application . . . . . . . . . . . . . . 3,200
One year later, Dean Lang Enterprises Inc. paid $19,300 in legal fees to successfully defend the patent against an infringement suit by Chinese Cookie Co. Give the entries on Dean Lang’s books indicated by the preceding events. Ignore any amortization of the patent or depreciation of the machine.
Step by Step Answer:
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen