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Indicate How Each of the Following Costs Should Be Recorded

Question 83

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Indicate how each of the following costs should be recorded by placing the appropriate letter (a-d) in the space provided

Premises:
Initial fee to acquire a franchise.
Design, construction, and testing of preproduction prototypes and models.
Legal costs incurred in connection with a successful patent application.
Laboratory research aimed at discovery of new knowledge.
Cost of purchased equipment that will be used in a series of R&D projects over a ten-year period.
Legal costs of the initial incorporation of a business.
Cost of a long-term lease of land containing mineral deposits.
Annual service fee paid to the franchiser's headquarters for administrative services rendered to the franchisee.
Responses:
charged to the patent account and amortized
charged to the franchise account and amortized
charged to other appropriate asset accounts and amortized or depreciated
charged to expense when incurred

Correct Answer:

Initial fee to acquire a franchise.
Design, construction, and testing of preproduction prototypes and models.
Legal costs incurred in connection with a successful patent application.
Laboratory research aimed at discovery of new knowledge.
Cost of purchased equipment that will be used in a series of R&D projects over a ten-year period.
Legal costs of the initial incorporation of a business.
Cost of a long-term lease of land containing mineral deposits.
Annual service fee paid to the franchiser's headquarters for administrative services rendered to the franchisee.
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