Question

Blossom Corp. incurred $710000 of research and development costs to develop a product for which a patent was granted on January 2, 2018. Legal fees and other costs associated with registration of the patent totaled $147000. On March 31, 2021, Blossom paid $285000 for legal fees in a successful defense of the patent. The total amount capitalized for the patent through March 31, 2021 should be

Answer 1

Answer:

$432,000

Explanation:

The computation of total amount capitalized for the patent is shown below:-

Total amount capitalized for the patent = Legal fees and other costs attached with patent registration + Legal fees in successful defense of the patent

= $147,000 + $285,000

= $432,000

Therefore for computing the total amount capitalized for the patent we simply added legal fees and other costs attached with patent registration and legal fees in successful defense of the patent and we have not considered research and development costs as they are expensed in that period in which they are incurred plus there are not capitalized