In 2018, Starsearch Corporation began work on three research and development projects. One of the projects was completed and commercial production of the developed product began in December. The company's fiscal year-end is December 31. All of the following 2018 expenditures were included in the R&D expense account:
Salaries and wages for: Lab research 490,000Design and construction of preproduction prototype 350,000Quality control during commercial production 39,000Materials and supplies consumed for: Lab research 79,000Construction of preproduction prototype 49,000Purchase of equipment 790,000Patent filing and legal fees for completed project 59,000Payments to others for research 215,000Total $2,071,000
$295,000 of equipment was purchased solely for use in one of the projects. After the project is completed, the equipment will be abandoned. The remaining $495,000 in equipment will be used on future R&D projects. The useful life of equipment is five years. Assume that all of the equipment was acquired at the beginning of the yearRequired:1. Prepare journal entries, reclassifying amounts in R&D expense, to reflect the appropriate treatment of the expenditures.