Bailey Corporation has a Research and Development (R&D) program where they tend to look into interesting new product ideas suggested by their engineers. In 2020, Bailey Corp. spent $500,000 on a R&D project, but at the end of the year they could not determine with confidence whether there would be any benefit from the research.

The project was completed in 2021, resulting in a successful patent. The R&D costs in 2021 to complete the project totaled $150,000. Bailey spent an additional $25,000 in legal fees to obtain the patent number. The patent has an expected useful life of 5 years.

In 2022, Bailey Corp. successfully defended the patent in litigation costing $55,000. The litigation resulted in the extension of the patent life through December 31, 2029.

Required:

Prepare all of the journal entries for Bailey Corp. for the years 2020, 2021, and 2022, including any amortization. Assume the straight-line method and no salvage value. Bailey's policy is to take a full years amortization in the year the asset is placed into service.