The company income statement and balance sheet

Reference no: EM13155056

During 2010, Robin Wright Tool Company purchased a building site for its proposed research and development laboratory at a cost of $60,000. Construction of the building was started in 2010. The building was completed on December 31, 2011, at a cost of $320,000 and was placed in service on January 2, 2012. The estimated useful life of the building for depreciation purposes was 20 years. The straight-line method of depreciation was to be employed, and there was no estimated salvage value.

Management estimates that about 50% of the projects of the research and development group will result in long-term benefits (i.e., at least 10 years) to the corporation. The remaining projects either benefit the current period or are abandoned before completion. A summary of the number of projects and the direct costs incurred in conjunction with the research and development activities for 2012 appears below.

Number
of Projects Salaries and Employee
Benefits Other Expenses
(excluding Building
Depreciation Charges)
Completed projects with long-term benefits
15
$90,000
$50,000
Abandoned projects or projects that
benefit the current period
10
65,000
15,000
Projects in process-results indeterminate
5
40,000
12,000
Total
30
$195,000
$77,000

Upon recommendation of the research and development group, Robin Wright Tool Company acquired a patent for manufacturing rights at a cost of $88,000. The patent was acquired on April 1, 2011, and has an economic life of 10 years.

If generally accepted accounting principles were followed, how would the items above relating to research and development activities be reported on the following financial statements?

(a) The company's income statement for 2012.

(b) The company's balance sheet as of December 31, 2012.

Reference no: EM13155056

Questions Cloud

Monthly advertising budget : Calculate the increase or decrease in net operating income if an 8,300 increase in the monthly advertising budget would increase monthly sales by 14,300

Write down expression for marginal revenue : write down expression for marginal revenue. choose the quantity and the price to maximize profit, assuming firm can only charge one price.

Problem of alternative minimum taxable income : Tanver Corporation, a calendar year corporation, has alternative minimum taxable income of $7 million in 2010 (before adjustment for adjusted current earnings). If Tanver's adjusted current earnings is $16 million, its tentative minimum tax for 20..

The decomposition of a certain ether was studied : Under these conditions, how long would it take for a sample to decompose to 25% of it original concentration?

The company income statement and balance sheet : During 2010, Robin Wright Tool Company purchased a building site for its proposed research and development laboratory at a cost of $60,000. Construction of the building was started in 2010. The building was completed on December 31, 2011, at a cost o..

Explain the president or the ceo that he or she is wrong : Consider both sides of the argument and come to a decision of whether to close the plant or continue to operate it. How would you explain to either the president or the CEO that he or she is wrong?

Journalize the transactions in the general journal : Christine Ewing is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred. Journalize the transactions in the general journal.

How much gas will dissolve : if 0.55 g of a gas dissolves in 1.0 l of water at 20.0 kPa of pressure, how much will dissolve at 110.0 kPa of pressure?

Compute molality and mass percent of alcohol : Calculate molality and mass percent of alcohol in the mixture. A solution of ethanol, C2H5OH, in water has a concentration of 1.996 mol L-1. At 20.0 ºC its density is 0.9677 g mL-1

User Account

All Pages