Erin Company incurred the following costs during 2017 and 2018: a. Research and development costing $20,000 was

Question:

Erin Company incurred the following costs during 2017 and 2018:

a. Research and development costing $20,000 was conducted on a new product to sell in future years. A product was successfully developed, and a patent for it was granted during 2017. Erin is unsure of the period benefited by the research, but believes the product will result in increased sales over the next five years.

b. Legal costs and application fees of $10,000 for the 20-year patent were incurred on January 1, 2017.

c. A patent infringement suit was successfully defended at a cost of $8,000. Assume that all costs were incurred on January 1, 2018.

Required

Determine how the costs in (a) and (b) should be presented on Erin's financial statements as of December 31, 2017. Also determine the amount of amortization of intangible assets that Erin should record in 2017 and 2018.

Intangible Assets
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented... Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...