1. Merriam Company commenced operations in the current year. A number of expenditures were made during the current year that were debited to one account intangible assets. (refer to data below) What total amount should be reported as intangible assets?

state incorporation fees and legal costs related to organizing an organization 100,000

Fire insurance 60,000

Purchase of Copyright 200,000

Legal fees for filing a patent on a new product resulting from an R&D Project 50,000

Legal fees for successful defense of the patent developed from the project 10,000

Entered into a 10-year franchise agreement with a franchisor 500,000

Advertising Cost 150,000

Purchase of all of the outstanding ordinary shares of an acquiree. On that date of purchase, the acquiree had total assets of 6,000,000 at fair value and total liabilities of 2,200,000 fair value. 5,000,000

2. Sonic Corporation reported gross payroll of P600,000 for the month of January. The entity paid the payroll net of the following deductions: Income tax - 70,000, SSS - 15,000, Philhealth - 8,000, Pagibig - 7,000, Total = 100,000. In addition, the entity recognized its additional contributions for the following in relation to January payroll: SSS - 20,000, Philhealth - 9,000, Pagibig - 6,000, Total = 35,000. What amount should be reported as total payroll tax liability?

3. Zooey Co. issued P500,000 face value bonds on January 1, 20x8. The bonds, which will mature on January 1, 20x11 pay interest of 12% every December 31. The bonds are issued to yield 10% interest. What was the issue price of the bonds? What is the carrying value of the bonds on December 31, 20x9?

4. On January 1, 20x8, CAL Corp. purchased land by issuing P1 million non-interest bearing note payable after 3 years. The company also purchased an equipment by issuing a non-interest promissory note that requires three annual installment payments of P100,000 every December 31. The interest rate charged on the notes is 10%. The present value of P1 at 10% for 3 periods is 0.75131 while the present value of an ordinary annuity of P1 at 10% for 3 periods is 2.4868. What is the carrying value of the P300,000 face value note at December 31, 20x8? What is the carrying value of the P1 million face value note at December 31, 20x9?

5 Lily Corp. issued 5,000, 5-year bonds, face amount of P1,000 each at 110. The bonds contain a conversion privilege that provides for an exchange of a P1,000 bond for 10 equity shares with par value of P100. It is reliably determined that the bonds would sell only at 95 without the conversion privilege. How much would be credited to bonds payable?

6. Rechilda Company developed a trademark to distinguish its products from those of its competitors. Through advertising and other means, the company is seeking to establish significant product identification to increase future sales. The similarity between the trademark costs and other intangible and operating costs has caused some confusion over proper accounting. The following items are being treated as part of the cost of the trademark:

Marketing research to study consumer tastes 400,000

Design cost of trademark 1,500,000

Legal fee of registering trademark 150,000

Advertising to establish recognition of trademark 200,000

Registration fee with Intellectual Property Office 50,000

Through renewals, the trademark is expected to have an unlimited life. What is the cost to be capitalized as

trademark?

a.1,700,000

b. 1,900,000

c. 2,300,000

d. 2,100,000