Answered

ABC developed a new horse transport device and incurred research and development costs of
$250,000. Rather than continue with their own research, ABC decided to purchase a patent for a similar design from Vail, Inc. for $350,000. What are the total assets and expenses for these developments?
A.Assets $600,000; Expenses $0. B) Assets $250,000; Expenses $350,000.
C) Assets $350,000; Expenses $250,000. D) Assets $0; Expenses $600,000.

Answer :

Answer:

The correct option is C

Explanation:

In developing the horse transport device, the expense or the cost which is incurred amounts to $250,000, therefore, the expense amounts to $250,000. Whereas, the ABC decided to purchase a patent for $350,000, patent is an intangible asset because the patent does not have any physical substance and provide the business a long term value. Therefore, it is an asset which worth $350,000.

Hence, Assets is $350,000 and Expense is $250,000.

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