E12-10B (Accounting for Patents) During 2008, Burks Corporation spent $510,000 in research and development costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2010, and had a legal life of 20 year

E12-10B (Accounting for Patents) During 2008, Burks Corporation spent $510,000 in research and development

costs. As a result, a new product called the New Age Piano was patented. The patent was obtained on October 1, 2010, and had a legal life of 20 years and a useful life of 10 years. Legal costs of $54,000 related to the patent were incurred as of October 1, 2010.

Instructions

(a) Prepare all journal entries required in 2010 and 2011 as a result of the transactions above.

(b) On June 1, 2012, Burks spent $28,440 to successfully prosecute a patent infringement. As a result, the estimate of useful life was extended to 12 years from June 1, 2010. Prepare all journal entries required in 2012 and 2013.

(c) In 2014, Burks determined that a competitor’s product would make the New Age Piano obsolete and the patent worthless by December 31, 2015. Prepare all journal entries required in 2014 and 2015.