1. Bratz Company purchased a patent on January 1, 2016 for P6,000,000. The original life of the patent was estimated to be 15 years. However, in December 2021, the controller received information proving conclusively that the product protected by the patent would be obsolete within four years. The entity decided to write off the unamortized portion of the patent cost over five years beginning in 2021.

What is the patent amortization for 2021?

a. 1,200,000

b. 1,000,000

c. 800,000

d. 400,000

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2. Safeguard Company was granted a patent on a product on January 1, 2011 with a 20-year useful life. To protect the patent, the entity purchased on January 1, 2021 for P4,500,000 a patent on a competing product which was originally issued on January 1, 2016. Because of the unique plant, the entity does not feel the competing patent can be used in producing a product.

What is the amortization of the competing patent for 2021?

a. 450,000

b. 225,000

c. 300,000

d. 0