Romo Company spent $190,000 developing a new process, $45,000 in legal fees to obtain a patent, and $91,000 to market the process that was patented, all in the year 2017. How should these costs be accounted for in 2017?
The $45,000 cost of obtaining the patent legitimately should be capitalized and amortized throughout the invention’s useful or legal life, whichever is shorter.
A patent is a legal right granted to a person or company to reproduce, use, or sell an invention without the interference of others.
In 2017, the $190,000 should be deducted as a research and development expense.
In 2017, the $91,000 will be deducted as selling and promotion expenditure.
Columbia Sportswear Company acquired a trademark that is helpful in distinguishing one of its new products. The trademark is renewable every 10 years at minimal cost. All evidence indicates that this trademarked product will generate cash flows for an indefinite period of time. How should this trademark be amortized?
Waters Corporation purchased Johnson Company 3 years ago and at that time recorded goodwill of $400,000. The Johnson Division’s net assets, including the goodwill, have a carrying amount of $800,000. The recoverable amount of the division is estimated to be $1,000,000. Prepare Waters’ journal entry, if necessary, to record an impairment of the goodwill.
94% of StudySmarter users get better grades.Sign up for free