Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

12-9Q

Expert-verified
Intermediate Accounting (Kieso)
Found in: Page 637

Short Answer

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.

See the step by step solution

Step by Step Solution

Meaning of patent

A patent is a legal right granted to a person or company to reproduce, use, or sell an invention without the interference of others.

Accounting of Costs

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.

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.