Hopson Company incurred $600,000 of research and development costs in its laboratory to develop a new product. It spent $80,000 in legal fees for a patent granted on January 2, 2014. On July 31, 2014, Hopson paid $60,000 for legal fees in a successful defense of the patent. What is the total amount that should be debited to Patents through July 31, 2012?
A) $600,000.
B) $140,000.
C) $740,000.
D) Some other amount.

Question

Quizplus · Accepted Answer

The total amount debited to Patents includes the legal fees for obtaining the patent ($80,000) and the legal fees for the successful defense of the patent ($60,000), totaling $140,000. Research and development costs are not capitalized as part of the patent.

Hopson Company Incurred $600,000 of Research and Development Costs in Its