Exercise 7-7 Record patent and research and development expense (LO7-2) The following information applies to the questions displayed below. Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent $3,100,000 1,020,000 510,000 310,000 71,000 31,000 Total $5,042,000 Required 1. Determine the amount Satellite Systems should capitalize to the Patent account in the balance sheet. Patent costs capitalized