Suppose Murask paid $2.6 million for a patent related to

Suppose Murask paid $2.6 million for a patent related to an integrated system, including hands-free cell phone, GPS, and iPod connectivity. The company expects to install this system in its automobiles for ten years. Murask will sell this as an “extra” for $1,700. In the first year, 9,900 units were sold. All costs per unit totalled $830. 

Required 

1. As the CFO, how would you record transactions relating to the patent in the first year? 

2. Prepare the income statement for the integrated system’s operations for the first year. Evaluate the profitability of the integrated system’s operations. Use an income tax rate of 32%. 

3. Explain what items were recorded as assets and why.