Question

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 that it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells one of its patents. The history of Fields patent number 758-6002-1A is as follows.

Date		Activity		Cost
2011 − 2012		Research conducted to develop precipitator		$369,000
Jan. 3, 2013		Design and construction of a prototype		84,800
Mar. 15, 2013		Testing of models		41,000
Jan. 4, 2014		Fees paid to engineers and lawyers to prepare patent application; patent granted January 4, 2014		68,000
Nov. 30, 2015		Engineering activity necessary to advance the design of the precipitator to the manufacturing stage		80,500
Dec. 31, 2016		Legal fees paid to successfully defend precipitator patent		33,600
Apr. 15, 2017		Research aimed at modifying the design of the patented precipitator		34,600
July 31, 2021		Legal fees paid in unsuccessful patent infringement suit against a competitor		33,000

Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2019, it revised its useful life estimate downward to five remaining years. The company’s year ends December 31. Fields follows IFRS for reporting purposes.

Calculate the carrying value of patent No. 758-6002-1A on December 31, 2014.

Carrying value of patent

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Calculate the carrying value of patent No. 758-6002-1A on December 31, 2018.

Carrying value of patent

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Calculate the carrying value of patent No. 758-6002-1A on December 31, 2021.

Carrying value of patent

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Would your answer differ if ASPE were followed?

Answer 1