New Age Designs Inc. is a company operating in the high-technology industry.  New Age Designs Inc. has been working on developing a cell phone case that can be used to sanitize your smart phone.  The design for this phone case was recently patented.  All 6 criteria have been met in order to capitalize development costs.  During the 2021 year, New Age Designs incurred the following costs related to research and development:

Cost to rent research facility	$   152,600
Engineering costs incurred to fix design problems noted with original prototype	48,410
Legal costs to obtain patent for cell phone case	72,220
Market research to create marketing campaign for product launch	12,105

 

New Age Designs started manufacturing and selling the cases on October 1, 2021.

The patent has a legal life of 20 years, an estimated useful life of 9 years, and a residual value of $0.

Where applicable, New Age Designs uses the straight-line method to amortize its intangible assets.

New Age Designs follows IFRS, and has a year end of December 31, 2021.

Required:

Calculate the amount that New Age Designs should capitalize as an intangible asset.

 

Prepare any journal entry necessary for the amortization of the intangible asset for the 2021 year, or indicate why no adjustment is required. 

Answer rating: 100% (QA)

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