Lopez Corp. incurred $840,000 of research and development costs to develop a product for which a patent was granted on January 2, 2012. Legal fees and other costs associated with registration of the patent totaled $160,000. On March 31, 2015, Lopez paid $300,000 for legal fees in a successful defense of the patent. The total amount capitalized for the patent through March 31, 2015 should be
A) $460,000.
B) $1,000,000.
C) $1,140,000.
D) $1,300,000.

Question

Quizplus · Accepted Answer

The total amount capitalized for the patent through March 31, 2015, is $460,000. This includes the initial legal fees and other costs associated with the registration of the patent ($160,000) plus the costs for the successful defense of the patent ($300,000). Research and development costs are expensed as incurred and are not capitalized.