Intermediate Accounting
1st Edition
ISBN: 9780132162302
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 11, Problem 11.26E
Research and Development Activities. During the current year, Carlson Industries, Inc. conducted significant research activities related to the development of a new computer chip. Carlson had the following costs:
| Description | Amount |
| Diagnostic equipment (5 year life, $10,000 residual value, S-L method, purchased January 1) | $ 500,000 |
| Salaries of laboratory technicians | 325,000 |
| Testing materials used in experimentation | 137,500 |
| Supplies used in the testing process | 23,500 |
| Salary for engineer in the design phase of production | 87,000 |
| 8,000 | |
| Total cost of research activities | $1,081,000 |
Prepare all
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The following costs are incurred during the research and development phases of a laser bone scanner Laboratory research aimed at discovery of new knowledge $800,000Search for application of new research findings 400,000Salaries of research staff designing new laser bone scanner 1,200,000Material, labor and overhead costs of prototype laser scanner 850,000Costs of testing prototype and design modifications 450,000Engineering costs incurred to advance the laser scanner to full production stage (technological feasibility reached) 700,000 Identify which of these are development phase items and will be immediately expensed under GAAP and IFRS. GAAP IFRS
$1,200,000 $1,200,000
$2,400,000 $1,400,000
$2,400,000 $2,500,000
$3,200,000 $2,500,000
Maxtor Technology incurred the following costs during the year related to the creation of a new type of personal
computer monitor:
Salaries
$220,000
Depreciation on R&D facilities and equipment
Utilities and other direct costs incurred for the R&D facilities
Patent filing and related legal costs
Payment to another company for performing a portion of the
development work
Costs of adapting the new monitor for the specific needs of a
125,000
66,000
22,000
120,000
80,000
customer
What amount should Maxtor report as research and development expense in its income statement?
Brill Company made the following expenditures during the current year:
Costs to develop computer software for internal use in Brill’s general
management information system: 1 000 000
Cost of market research activities 750 000
How much Brill Company's expense?
Chapter 11 Solutions
Intermediate Accounting
Ch. 11 - Stephen J. Cosgrove is the Former Vice President....Ch. 11 - Prob. 11.2QCh. 11 - Prob. 11.3QCh. 11 - Prob. 11.4QCh. 11 - Will the expense/capitalization choice impact...Ch. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - For a long-lived operating asset acquired by...Ch. 11 - Prob. 11.9QCh. 11 - Prob. 11.10Q
Ch. 11 - Prob. 11.11QCh. 11 - What is the maximum amount of interest to be...Ch. 11 - Prob. 11.13QCh. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Do firms expense all costs incurred after the...Ch. 11 - Prob. 11.17QCh. 11 - Prob. 11.18QCh. 11 - When using the double-declining balance...Ch. 11 - Prob. 11.20QCh. 11 - Will a firm recognize a loss on the income...Ch. 11 - Prob. 11.22QCh. 11 - Prob. 11.23QCh. 11 - Prob. 11.24QCh. 11 - Prob. 11.25QCh. 11 - Prob. 11.26QCh. 11 - Prob. 11.27QCh. 11 - Prob. 11.28QCh. 11 - Prob. 11.29QCh. 11 - Prob. 11.30QCh. 11 - Prob. 11.31QCh. 11 - Prob. 11.32QCh. 11 - Prob. 11.33QCh. 11 - Prob. 11.34QCh. 11 - Prob. 11.35QCh. 11 - In a nonmonetary exchange does a firm record the...Ch. 11 - Prob. 11.37QCh. 11 - Prob. 11.38QCh. 11 - Prob. 11.39QCh. 11 - Prob. 11.40QCh. 11 - Prob. 11.1MCCh. 11 - On January 1, Year 1, Bluebird Inc. borrowed 10...Ch. 11 - Prob. 11.3MCCh. 11 - Prob. 11.4MCCh. 11 - Prob. 11.5MCCh. 11 - Prob. 11.6MCCh. 11 - Prob. 11.7MCCh. 11 - Prob. 11.8MCCh. 11 - Determining Acquisition Cost. Haply, Inc. incurred...Ch. 11 - Determining Acquisition Cost. Tarpley, Inc....Ch. 11 - Prob. 11.3BECh. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Prob. 11.6BECh. 11 - Prob. 11.7BECh. 11 - Prob. 11.8BECh. 11 - Depreciation, Straight-Line Method. Hermit...Ch. 11 - Prob. 11.10BECh. 11 - Prob. 11.11BECh. 11 - Prob. 11.12BECh. 11 - Prob. 11.13BECh. 11 - Derecognition Due to Abandonment. Greene Corp....Ch. 11 - Prob. 11.15BECh. 11 - Prob. 11.16BECh. 11 - Prob. 11.17BECh. 11 - Prob. 11.18BECh. 11 - Prob. 11.19BECh. 11 - Prob. 11.20BECh. 11 - Leasehold Improvements. At the beginning of its...Ch. 11 - Determining Acquisition Cost. St Charles Flooring...Ch. 11 - Prob. 11.2ECh. 11 - Prob. 11.3ECh. 11 - Prob. 11.4ECh. 11 - Prob. 11.5ECh. 11 - Prob. 11.6ECh. 11 - Capitalization of Interest, Specific and General...Ch. 11 - Prob. 11.8ECh. 11 - Prob. 11.9ECh. 11 - Capitalization of Interest, Specific and General...Ch. 11 - Prob. 11.11ECh. 11 - Expensing versus Capitalizing ExpendituresAnalysis...Ch. 11 - Depreciation Methods, Disposal. Kurtis Koal...Ch. 11 - Prob. 11.14ECh. 11 - Depreciation Methods, Partial-Year Depreciation....Ch. 11 - Prob. 11.16ECh. 11 - Depreciation Methods. Ace Manufacturing, Inc....Ch. 11 - Prob. 11.18ECh. 11 - Depreciation Methods, Partial-Year Depreciation,...Ch. 11 - Prob. 11.20ECh. 11 - Partial-Year Depreciation, Sale of Property,...Ch. 11 - Prob. 11.22ECh. 11 - Disclosure of Property, Plant, and Equipment. Use...Ch. 11 - Disclosure of Property, Plant, and Equipment,...Ch. 11 - Prob. 11.25ECh. 11 - Research and Development Activities. During the...Ch. 11 - Prob. 11.27ECh. 11 - Goodwill Computation, Acquisition of Intangibles,...Ch. 11 - Prob. 11.29ECh. 11 - Prob. 11.30ECh. 11 - Prob. 11.31ECh. 11 - Prob. 11.32ECh. 11 - Prob. 11.33ECh. 11 - Prob. 11.34ECh. 11 - Prob. 11.35ECh. 11 - Prob. 11.36ECh. 11 - Prob. 11.37ECh. 11 - Exchanges Lacking Commercial Substance, Cash...Ch. 11 - Prob. 11.39ECh. 11 - Prob. 11.41ECh. 11 - Prob. 11.42ECh. 11 - Note Payable Exchanged for a Plant Asset (Deferred...Ch. 11 - Prob. 11.2PCh. 11 - Prob. 11.3PCh. 11 - Depreciation Methods and Depreciation Schedules....Ch. 11 - Prob. 11.5PCh. 11 - Prob. 11.6PCh. 11 - Goodwill and Bargain Purchase Computations. The...Ch. 11 - Prob. 11.8PCh. 11 - Prob. 11.9PCh. 11 - Prob. 11.10PCh. 11 - Prob. 11.11PCh. 11 - Judgment Case 1: Property, Plant, and Equipment:...Ch. 11 - Prob. 2JCCh. 11 - Prob. 1FSACCh. 11 - Surfing the Standards Cases Surfing the Standards...Ch. 11 - Prob. 2SSCCh. 11 - Surfing the Standards Case 3: Involuntary...Ch. 11 - Prob. 4SSCCh. 11 - Prob. 5SSCCh. 11 - Prob. 6SSCCh. 11 - Prob. 1BCCCh. 11 - Prob. 2BCC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- "An industrial engineer proposed the purchase of an RFID Ford Asset Tracking System for the company's warehouse and weave rooms. The engineer felt that the purchase would provide a better system of locating cartons in the warehouse by recording the locations of the cartons and storing the data in the computer. The estimated investment, annual operating and maintenance costs, and expected annual saving are as follows: Costof equipment and installation: $125.200 Project life: 5 years Expected salvage $22,000 Investment in working capital (fully recoverable at the end of the project life ):$27000 Expected annual savings on labor and materials $52700 Expected annual expenses: $6,800 Depreciation method :five year MACRS As a part of this project, the firm will take a loan of $29,000 to be repaid in three equal annual payments at 13.2% interest. The firm's marginal tax rate is 21%. Determine the IRR of the RFID system. Express your answer as a percentage rounded to the nearest tenth of a…arrow_forwardSaxon Products, Inc., is investigating the purchase of a robot for use on the company’s assembly line. Selected data relating to the robot are provided below: Cost of the robot $ 1,900,000 Installation and software $ 440,000 Annual savings in inventory carrying costs $ 229,000 Annual increase in power and maintenance costs $ 49,000 Salvage value in 5 years $ 78,000 Useful life 5 years In addition to the data above, engineering studies suggest that use of the robot will result in a savings of 30,000 direct labor-hours each year. The labor rate is $14 per hour. Also, the smoother work flow made possible by the use of automation will allow the company to reduce the amount of inventory on hand by $419,000. This inventory reduction will take place at the end of the first year of operation; the released funds will be available for use elsewhere in the company. Saxon Products has a 16% required rate of return. Click here to view Exhibit 12B-1 and…arrow_forwardDuring the current year, Beta Company incurred the following costs related to a new solar-powered car: Salaries of laboratory employees researching how to build the new car 2,500,000 200,000 Legal fees for the patent application for the new car Engineering follow-up during the early stage of commerical production during the current year Marketing research to promote the new car Design, testing and construction of a prototype 500,000 300,000 4,000,000 What amount should be reported as research and development expense? a. 7,500,000 b. 6,500,000 C. 2,500,000 d. 7,200,000arrow_forward
- Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures:Basic research to develop the technology $ 3,900,000Engineering design work 1,180,000Development of a prototype device 590,000Testing and modification of the prototype 390,000Legal fees for patent application 79,000Legal fees for successful defense of the new patent 39,000Total $ 6,178,000During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized.Required:1. Which of the above costs should Satellite Systems capitalize to the Patent account in the balance sheet?2. Which of the above costs should Satellite Systems report as research and development expense in the income statement?3. What are the basic criteria…arrow_forwardA company owner has asked his accountant to research the photocopier equipment available from vendors, and to recommend the two best equipment alternatives. The company owner will decide on one piece of equipment to purchase. The fee charged for the accountant’s research was $500. The accountant’s report produced the following information: Photocopier (A) Photocopier (B) Initial cost, including installation $6,500 $ 6,000 Economic life 5 years 5 years Scrap value at end of economic life -0- -0- Initial training cost $ 500 $ 700 Annual maintenance $ 400 $ 300 Annual wage cost $12,500 $12,500 REQUIRED Which photocopier should the company owner choose? Why? The company owner requested your help in preparing the coming year company budget. Please, guide him to the best method and appropriate type from your perspective. Evaluation and Grading: Your answers would be evaluated and graded based on: Coverage…arrow_forwardDorman company purchased a new machine for its production process. The following costs were incurred for the new machine. Training costs for workers who will operate the machine $15,000 Wages paid to workers who operate the machine during production 109,000 Ordinary repairs to the machine before the first production run 1,000 1 Cost of platform used to properly secure the machine 30,000 Costs of tests run which took place before the first production run 8,000 WHICH COSTS SHOULD BE ADDED TO THE COST OF MACHINE?arrow_forward
- Saxon Products, Incorporated, is investigating the purchase of a robot for use on the company’s assembly line. Selected data relating to the robot are provided below: Cost of the robot $ 1,900,000 Installation and software $ 480,000 Annual savings in inventory carrying costs $ 216,000 Annual increase in power and maintenance costs $ 36,000 Salvage value in 5 years $ 76,000 Useful life 5 years In addition to the data above, engineering studies suggest that use of the robot will result in a savings of 31,000 direct labor-hours each year. The labor rate is $18 per hour. Also, the smoother work flow made possible by the use of automation will allow the company to reduce the amount of inventory on hand by $406,000. This inventory reduction will take place at the end of the first year of operation; the released funds will be available for use elsewhere in the company. Saxon Products has a 23% required rate of return. Click here to view Exhibit 14B-1 and Exhibit…arrow_forwardRequired information Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $49,000. The machine's useful life is estimated at 10 years, or 400,000 units of product, with a $9,000 salvage value. During its second year, the machine produces 34,000 units of product. Exercise 8-5 Units-of-production depreciation LO P1 Determine the machine's second-year depreciation using the units-of-production method. Units-of-production Depreciation Choose Numerator: Choose Denominator: Annual Depreciation Expense Depreciation expense per unit Year Annual Production (units) Depreciation Expense 2arrow_forwardRequired information Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $49,000. The machine's useful life is estimated at 10 years, or 400,000 units of product, with a $9,000 salvage value. During its second year, the machine produces 34,000 units of product. Exercise 8-6 Double-declining-balance depreciation LO P1 Determine the machine's second-year depreciation using the double-declining-balance method. Double-declining-balance Depreciation Annual Depreciation Expense Choose Factors: Choose Factor(%) х Depreciation expense First year's depreciation %3D Second year's depreciationarrow_forward
- Saxon Products, Incorporated, is investigating the purchase of a robot for use on the company’s assembly line. Selected data relating to the robot are provided below: Cost of the robot $ 1,800,000 Installation and software $ 470,000 Annual savings in inventory carrying costs $ 214,000 Annual increase in power and maintenance costs $ 34,000 Salvage value in 5 years $ 74,000 Useful life 5 years In addition to the data above, engineering studies suggest that use of the robot will result in a savings of 29,000 direct labor-hours each year. The labor rate is $14 per hour. Also, the smoother work flow made possible by the use of automation will allow the company to reduce the amount of inventory on hand by $404,000. This inventory reduction will take place at the end of the first year of operation; the released funds will be available for use elsewhere in the company. Saxon Products has a 16% required rate of return. view Exhibit 14B-1 and Exhibit 14B-2, to…arrow_forwardRequired information Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $49,000. The machine's useful life is estimated at 10 years, or 400,000 units of product, with a $9,000 salvage value. During its second year, the machine produces 34,000 units of product. Exercise 8-4 Straight-line depreciation LO P1 Determine the machine's second-year depreciation and year end book value under the straight-line method. Straight-Line Depreciation Annual Depreciation Expense Choose Numerator: / Choose Denominator: Depreciation expense Year 2 Depreciation Year end book value (Year 2)arrow_forwardRequired information Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $47,500. The machine's useful life is estimated at 10 years, or 405,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 34,500 units of product. Exercise 8-6 Double-declining-balance depreciation LO P1 Determine the machine's second-year depreciation using the double-declining-balance method. Double-declining-balance Depreciation es Annual Depreciation Expense Depreciation expense Choose Factors: Choose Factor(%) !! First year's depreciation Second year's depreciation %3Darrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Asset impairment explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=lWMDdtHF4ZU;License: Standard Youtube License