Use the Following Data for Questions 10 Through 17

question 60

Essay

Use the following data for questions 10 through 17. Each question is independent of the other questions.
Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
Brown Corporation has a machine (Machine B) that it acquired on 1/1/14 for $729,000. On 12/31/14 such machines have a selling price and fair value of $540,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
On 12/31/14 Brown gave Machine B plus $81,000 cash to Sawyer in return for
Machine A.
-Research and Development.Identify (in accordance with FASB Statement No. 2) each of the following activities as:1. Testing in search for, or evaluation of, product or process alternatives.2. Cost of marketing research to promote new product.3. Adaptation of an existing capability to a particular requirement or customer's need.4. Design, construction, and testing of pre-production prototypes and models.5. Routine, on-going efforts to refine, enrich, or improve the qualities of an existing product.6. Engineering activity required to advance the design of a product to the manufacturing stage.7. Searching for applications of new research findings.8. Laboratory research aimed at discovery of new knowledge.9. Conceptual formulation and design of possible product or process alternatives.10. Trouble-shooting break-downs during production.11. Periodic design changes to existing products.12. Quality control during commercial production including routine testing.13. Costs of testing prototype and design modifications.14. Engineering follow-through in an early phase of production.15. Design, construction, and operation of a pilot plant not useful for commercial production.
a. Research and development
b. Not research and development

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Definitions:

Ledger

An accounting book or computer file for recording and totaling economic transactions measured in terms of a monetary unit and categorized by account type.

Account Titles

Names given to the accounts that reflect the types of transactions they represent, used in bookkeeping to distinguish financial records.

Journalizing

The process of recording transactions in a company's journal, detailing the financial activities and their impact on accounts.

Ledger

A collection of accounts in which the transactions of a business are categorized and recorded, serving as the main accounting record.