Question
1.MI6 an oil exploration & production company recently installed an oil rig at a cost of P40,000,000. Legislation requires that oil rigs similar to the
1.MI6 an oil exploration & production company recently installed an oil rig at a cost of P40,000,000. Legislation requires that oil rigs similar to the one installed by MI6 be decommissioned at the end of its useful life.
MI6 expects that the useful life of the rig will be 10 years and estimated the decommissioning costs to be P3,000,000. Current interest rates are at 12%.
2.
Lily Aldrin Co. acquired the following equipment as follows:
A truck in exchange for 10,000 of its own shares held in treasury. The P50 par value shares were acquired for P60 and were quoted at P70 while the truck's fair value was P690,000 at the time of the exchange.
A mixer in exchange for 5,000 of Mosbius Design's P50 par value ordinary shares which were acquired for P75. The shares have a fair value of P90 per share while the mixer's value P440,000.
3.DC Company incurred P450,000 of research and development cost to develop a product for which a patent was granted on January 2, 2018. Legal fees and other costs associated with the registration of the patent totaled P100,000 on July 31, 2018, DC paid P200,000 for legal fees in a successful defense of the patent. The total amount capitalized for this patent through July 31, 2018 should be __________________
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