Question

Sunland Company incurred $610000 of research and development costs in its laboratory to develop a new product. It spent $87000 in legal fees for a patent granted on January 2, 2021. On July 31, 2021, Sunland paid $54000 for legal fees in a successful defense of the patent. What is the total amount that should be debited to Patents through July 31, 2021?

Answer 1

The total amount to be debited to Patents account is :

$87000 + 54000 = $141,000

Step-by-step explanation:

Among the amounts in the question, only legal fees of $87000 and $54000 being paid to grant a patent and defence respectively , are recognized. The Research and Development costs of $610000 is not permitted to be debited to patent account.