In 2021, a company purchased two patents. Related information follows: Patent 1 Patent 2 Purchase price $ 560,000 $ 260,000 Legal and filing fees 31,000 26,000 In addition, near the end of 2021, the legality of both patents was challenged. The company paid $56,000 to defend Patent 1, and the defense was successful. The company paid $46,000 to defend Patent 2, but the defense was not successful and the patent was determined to have no value. Ignoring any amortization in 2021, the amount of expenditures to capitalize at the end of the year is:

Patent 1 $647,000 Patent 2 $286,000

Explanation:                                              Amount in $

                                                         Patent 1            Patent 2

Purchase Price                                 560,000          260,000

Legal Fees                                           31,000              26,000      

Legal fees to defend patent               56,000               0

Total Capitalized Cost                       647,000             286,000    

legal fees of patent 1 is only capitalized because its defense was successful .As the defense of patent was unsuccessful there its not capitalized.        

answer; normative economics;