What amount should be capitalized as cost of patent

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Reference no: EM132673699

Bavin Co. developed a new machine for manufacturing baseballs. Because the machine is considered very valuable, the entity had it patented.

The following expenditures were incurred in developing and patenting the machine:

Purchase of special equipment to be used solely for development of new machine $900,000
Research Salaries and fringe benefits for engineers and scientists $100,000
Cost of testing prototype $125,000
Legal Cost for filing of patent $75,000
Fees paid to government patent office $25,000
Drawings required by patent office to be filed with patent application $20,000

Problem 1: What amount should be capitalized as cost of patent? What amount of research and development cost should be expensed in the current year?

Reference no: EM132673699

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