Given Below Are Costs Incurred by Bunker Company During 2014

Essay

Given below are costs incurred by Bunker Company during 2014 and 2015. Bunker follows the policy of decreasing the intangible asset account directly as amortized.
Research was conducted to discover a new product and costs of $200,000 in 2014 and $80,000 in 2015 were incurred. After several months, a product was created and a patent secured for a cost of $150,000, effective as of July 1, 2015. The company expects to have increased revenues of $500,000 over the next several years. The patent is expected to be useful for the next 10 years.
A. Prepare a partial income statement for the year ended December 31, 2015.
B. How should the $80,000 cost incurred in 2015 be reported on the financial statements?