P12-2 (Accounting for Patents) Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows.

Date: Activity: Cost:
2003-2004 Research conducted to develop precipitator $384,000
Jan. 2005 Design and construction of a prototype 87,600
March 2005 Testing of models 42,000
Jan. 2006 "Fees paid engineers and lawyers to prepare patent
application; patent granted June 30, 2008" 59,500

Nov. 2007 "Engineering activity necessary to advance the design
of the precipitator to the manufacturing stage" 81,500

Dec. 2008 "Legal fees paid to successfully defend precipitator
patent" 42,000

April 2009 "Research aimed at modifying the design of the
patented precipitator" 43,000

July 2013 "Legal fees paid in unsuccessful patent infringement
suit against a competitor" 34,000


Fields assumed a useful life of 17 years when it received the initial precipitator
patent. On January 1, 2011, it revised its useful life estimate downward to 5
remaining years. Amortization is computed for a full year if the cost is incurred prior to July 1, and no amortization for the year if the cost is incurred after June 30. The company's year ends December 31.


Instructions:
(a) Compute the carrying value of patent No. 758-6002-1A on December 31, 2008.


(b) Compute the carrying value of patent No. 758-6002-1A on December 31, 2012.


(c) Compute the carrying value of patent No. 758-6002-1A on December 31, 2015.


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