Financial Accounting

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Determining Cost: Capitalized Amount for Patent


On January 30, 2015, Red Herring Company was granted a patent by the U. S. Patent Office. The patent provided the company with exclusive right to manufacture a specific product.

The following costs were incurred relative to the development of the product and the filing of the patent:

Item Amount in \$
Filing fees to secure the patent – incurred in 2015 10,000
Legal fees to secure the patent – incurred in 2015 5,000
Research and Development related to the product – incurred in 2014 200,000
Legal fees to successfully defend the patent against infringement – incurred in 2015 45,000

What is the total amount of costs that will be capitalized relative to the patent in 2015?