Runway Corp is a modern furniture manufacturer Jim Castello, CFO of Runway Corp, has hired you as a consultant to the corporation To ensure proper reporting of the fixed assets balance on the financial statements, Jim has an issue for you to research as follows. During Year 1, Runway Corp paid $5,000 to a lawyer for expenses related to obtaining a patent to be used in the production of a revolutionary new bean bag chair Timothy knows that research and development costs are expensed immediately but with exceptions so he would like to know if this qualifies as a research and development expenditure that can be capitalized or expensed Timothy has asked you to conduct research to determine whether the $5,000 lawyer fee is a research and development cost that is an exception to the rule and can be capitalized. Search the authoritative literature, researching to locate the proper reporting guidelines.

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Answer 1 The 5000 lawyer fee paid by Runway Corp during Year 1 is considered a research and development cost and is an exception to the rule that requires such costs to be expensed immediately Accordi... View the full answer