Christian Gray Corp. was granted a patent on January 1, 2015 and appropriately capitalized P550,000 of related costs.Gray was amortizing the patent over its estimated life of 15 years.During 2018, Gray paid P250,000 in legal costs in successfully defending an attempted infringement of the patent.After the legal action was completed, Gray sold the patent to the plaintiff for P850,000.Gray's policy is to take no amortization in the year of disposal.In its 2018 income statement, what amount should Gray report as gain from sale of patent?

a.

P300,000

b.

P410,000

c.

P160,000

d.

P446,667

GA incurred research and development costs in 2020 as follows:

• Equipment acquired for use in research and development projects P1,000,000
• Depreciation on the above equipment P150,000
• Materials used P200,000
• Compensation costs of personnel P500,000
• Outside consulting fees P100,000
• Indirect costs appropriately allocated P250,000

The total research and development costs charged as expense in GA's 2020 income statement should be:

a.

P1,200,000

b.

P1,800,000

c.

P650,000

d.

P900,000

EU acquired a copyright in exchange for 10,000 ordinary shares, par value P10.The quoted market price on the stock exchange was P15 per share.The copyright was estimated by EU to have a fair market value of P140,000.EU should record the copyright on its books at:

a.

P150,000

b.

P100,000

c.

P140,000

d.

P 0.00

Golden Company developed a new machine for manufacturing baseballs.Because the machine is considered very valuable, the entity had it patented.The following expenditures were incurred in developing and patenting the machine.

• Purchase of special equipment to be used solely for development of the new machine, P1,700,000
• Research salaries and fringe benefits for engineers and scientists, P300,000
• Cost of testing prototype, P200,000
• Legal cost for filing of patent, P6,000
• Fees paid to government patent office, P40,000
• Drawings required by patent office to be filed with patent application, P50,000

How much is the cost of patent and research and development expense?

a.

Patent P396,000; Research and Development expense P1,900,000

b.

Patent P96,000; Research and Development expense P2,200,000

c.

Patent P296,000; Research and Development expense P2,000,000

d.

Patent P96,000; Research and Development expense P500,000