Question

Exercise 12-11 (Part Level Submission) Tones Industries has the following patents on its December 31, 2013, balance sheet. Patent Item Initial Cost Date Acquired Useful Life at Date Acquired Patent A $53,040 3/1/10 17 years Patent B $25,800 7/1/11 10 years Patent C $16,800 9/1/12 4 years The following events occurred during the year ended December 31, 2014. 1. Research and development costs of $241,660 were incurred during the year. 2. Patent D was purchased on July 1 for $39,444. This patent has a useful life of 91/2 years. 3. As a result of reduced demands for certain products protected by Patent B, a possible impairment of Patent B’s value may have occurred at December 31, 2014. The controller for Tones estimates the expected future cash flows from Patent B will be as follows. Year Expected Future Cash Flows 2015 $1,940 2016 1,940 2017 1,940 The proper discount rate to be used for these flows is 8%. (Assume that the cash flows occur at the end of the year.) Collapse question part (a) Compute the total carrying amount of Tones’ patents on its December 31, 2013, balance sheet. (Round all answers to 0 decimal places, e.g. 8,564) Total carrying amount $

Answer 1