Question

Aspen, Inc. attempted to create a new horse transport device and incurred research and development costs of $250,000 in the first half of the current year. Rather than continue with its own research, Aspen decided to purchase a patent for a similar design from Vail, Inc. and purchased the patent for $350,000 on October 1 of the current year. What are the total assets and expenses recorded for these costs with regard to the new transport device?

Answer 1

Answer:

Assets = $350,000

Expenses = $250,000.

Explanation:

It has been given that $250,000 has been spent on research and development work on new transport equipment, and a patent (Design form Vail inc.) of $350,000 has been purchased.  

The expenditure of $250,000 spent on new transport equipment considers as expenses and $350,000 spent on patents will be shown as intangible assets.