Given Below Are Costs Incurred During 2019 and 2020 by a Company

question 95

Essay

Given below are costs incurred during 2019 and 2020 by a company that follows the policy of decreasing the intangible asset account directly as amortized.
Research was conducted to discover a new product and costs of $400,000 in 2019 and $800,000 in 2020 were incurred. After several months, a product was created and a patent secured for a cost of $180,000, effective as of July 1, 2020. The company expects to have increased revenues of $500,000 over the next several years. The patent is expected to be useful for the next 10 years.
A)Prepare a partial income statement for the year ended December 31, 2020.
B)How should the $800,000 cost incurred in 2020 be reported on the financial statements?

• A)Prepare a partial income statement for the year ended December 31, 2020.
• B)How should the $800,000 cost incurred in 2020 be reported on the financial statements?

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