Question: During 2007, Maciel Inc.'s research and development department developed a new manufacturing process. Research and development costs were $350,000. The process was patented on October

During 2007, Maciel Inc.'s research and development department developed a new manufacturing process. Research and development costs were $350,000. The process was patented on October 1, 2007. Legal costs to acquire the patent were $23,800. Maciel decided to expense the patent over a 20-year time period using the straight-line method. Maciel's fiscal year ends on September 30.

On October 1, 2012, Maciel's competition announced that it had obtained a patent on a new process that would make Maciel's patent completely worthless.

Required

1. How should Maciel record the $350,000 and $23,800 costs?

2. How much amortization expense should Maciel report in each year through the year ended September 30, 2012?

3. What amount of loss should Maciel report in the year ended September 30, 2013?

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