During the Current Year Knight Company Incurred Several Expenditures

question 151

Essay

During the current year Knight Company incurred several expenditures. Briefly explain whether the expenditures listed below should be recorded as an operating expense or as an intangible asset. If you view the expenditure as an intangible asset, indicate the number of years over which the asset should be amortized. Explain your answer.
(a) Spent $30,000 in legal costs in a patent defense suit. The patent was unsuccessfully defended.
(b) Purchased a trademark from another company. The trademark can be renewed indefinitely. Knight Company expected the trademark to contribute to revenue indefinitely.
(c) Knight Company acquires a patent for $2,000,000. The company selling the patent has spent $1,000,000 on the research and development of it. The patent has a remaining life of 15 years.
(d) Knight Company is spending considerable time and money in developing a different patent for another product. So far $3,000,000 has been spent this year on research and development. Knight Company is very confident they will obtain this patent in the next few years.

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Definitions:

Focus Charting Method

is a systematic approach to documentation in healthcare, emphasizing the patient's concerns, care plan, and progress.

Yellow-Green Emesis

Vomit that has a yellow-green color, often indicating the presence of bile.

Vomited

The act of forcefully expelling the stomach's contents through the mouth.

SBAR

Situation-Background-Assessment-Recommendation; a communication tool commonly used during change-of-shift reports to promote and maintain effective communication among the health care team when discussing a client’s condition and progress.