Question

Pierce Company incurred $150,000 of research and development costs in its laboratory to develop a new product. It spent $20,000 in legal fees for a patent granted on January 2, 2022. On July 31, 2022, Pieree paid $15,000 for legal fees in a successful defense of the patent.

What is the total amount that should be debited to Patents through July 31, 2022?

Answer 1

$35,000

Step-by-step explanation:

The computation of total amount that should be debited to patents is shown below:-

The costs of research and development are incurred in the time in which those costs are incurred and not capitalized.

Total amount that should be debited to patents = Patent granted + Legal fees paid

= $20,000 + $15,000

= $35,000

Therefore for computing the total amount that should be debited to patents we simply added patents granted and legal fees paid.