Harmax Limited Spent $5,000 Registering an Internally Developed Patent and Then

question 54

Multiple Choice

Harmax Limited spent $5,000 registering an internally developed patent and then another $20,000 defending and enforcing the patent in its first year.How should the patent be reflected in the financial statements?

• A)the full $25,000 expensed in the year
• B)$5,000 capitalized as Patent asset and the $20,000 expensed
• C)$20,000 capitalized as Patent asset and the $5,000 expensed
• D)the full $25,000 capitalized in the year

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Definitions:

100 Percent Reserve

A banking system where banks hold reserves equal to 100% of their deposit liabilities, meaning all deposits can be fully backed by liquid assets, reducing the risk of bank runs.

Fractional Reserve System

A banking system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal.

Quartz

A hard, crystalline mineral composed of silicon dioxide, widely used in jewelry and as an industrial abrasive.

Medium Of Exchange

An intermediary instrument used to facilitate the sale, purchase, or trade of goods between parties.