Costs Associated with Various Intangibles of a Company May Either

question 120

Essay

Costs associated with various intangibles of a company may either be expensed when incurred or capitalized and amortized. Such costs might be recorded in any of the following ways:
a. charged to the patent account and amortized
b. charged to the franchise account and amortized
c. charged to other appropriate asset accounts and amortized or depreciated
d. charged to expense when incurred
Required:
Indicate how each of the following costs should be recorded by placing the appropriate letter a-d) in the space provided.
____ 1. initial fee to acquire a franchise
____ 2. design, construction, and testing of preproduction prototypes and models
____ 3. legal costs incurred in connection with a successful patent application
____ 4. laboratory research aimed at discovery of new knowledge
____ 5. cost of purchased equipment that will be used in a series of R&D projects over a ten-year period
____ 6. legal costs of the initial incorporation of a business
____ 7. cost of a long-term lease of land containing mineral deposits
____ 8. annual service fee paid to the franchiser's headquarters for administrative services rendered to the franchisee

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