During 2018, Matsumura Ltd. spent ¥170,000 in research costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2018, and had a legal life of 20 years and a useful life of 10 years. Legal costs of ¥24,000 related to the patent were incurred as of October 1, 2018. (Amounts are in thousands.)
Instructions
a. Prepare all journal entries required in 2018 and 2019 as a result of the transactions above.
b. On June 1, 2020, Matsumura spent ¥12,400 to successfully prosecute a patent infringement suit. As a result, the estimate of useful life was extended to 12 years from June 1, 2020. Prepare all journal entries required in 2020 and 2021.
c. In 2022, Matsumura determined that a competitor's product would make the New Age Piano obsolete and the patent worthless by December 31, 2023. Prepare all journal entries required in 2022 and 2023.