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After many years, and 5000000 dollars of research and developments, ibm has developed a patent for a new "laptop tablet" computer. When the device started selling briskly a competitor came out with an identical model. IBM successfully sued the rival for patent infringement. IBM incurred legal and court fees of 1200000 and also additional advertising expenses of 375000 related to the above matters. Assuming the patent is good for 17 years but the engineering staff believes that economic usefulness of device will fade after 5 years.

Required

Explain how ibm should treat the above figures in it's financial statements. Specifically what entries it should make to which accounts? Any Amortization?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92750022

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