DH Company has provided the following information on intangible assets: A patent was purchased from BB Company for P2,250,000 on January 1, 2018. DH estimated the remaining useful life of the patent to be 10 years. The patent was carried in BB's accounting records at a net book value of P1,800,000 when BB sold it to DH. During 2019, a franchise was purchased from Greene Company for P522,000. In addition, 6% of revenue from the franchise must be paid to Greene. Revenue from the franchise for 2019 was P2,250,000. DH estimates the useful life of the franchise to be 10 years and takes full year's amortization in the year of purchase. DH incurred research and development costs in 2019 as follows: Materials and equipment P 127,800 Personnel 170,100 Indirect costs 91,800 Total P 389,700 DH estimates that these costs will be recouped by December 31, 2022, but due to uncertainty in the market, its process has not achieved economic viability. The materials and equipment purchased have no alternative use. On January 1, 2019, because of recent events in the field, DH estimates that the remaining life of patent purchased on January 1, 2018 is only 5 years from January 1, 2019. Requirements: a. Prepare a schedule showing the intangibles section of DH's statement of financial position at December 31, 2019. Show supporting computations in good form. b. Prepare a schedule showing the income statement effect for the year ended December 31, 2019, as a result of the facts above. Show supporting computations in good form. DH Company has provided the following information on intangible assets: A patent was purchased from BB Company for P2,250,000 on January 1, 2018. DH estimated the remaining useful life of the patent to be 10 years. The patent was carried in BB's accounting records at a net book value of P1,800,000 when BB sold it to DH. During 2019, a franchise was purchased from Greene Company for P522,000. In addition, 6% of revenue from the franchise must be paid to Greene. Revenue from the franchise for 2019 was P2,250,000. DH estimates the useful life of the franchise to be 10 years and takes full year's amortization in the year of purchase. DH incurred research and development costs in 2019 as follows: Materials and equipment P 127,800 Personnel 170,100 Indirect costs 91,800 Total P 389,700 DH estimates that these costs will be recouped by December 31, 2022, but due to uncertainty in the market, its process has not achieved economic viability. The materials and equipment purchased have no alternative use. On January 1, 2019, because of recent events in the field, DH estimates that the remaining life of patent purchased on January 1, 2018 is only 5 years from January 1, 2019. Requirements: a. Prepare a schedule showing the intangibles section of DH's statement of financial position at December 31, 2019. Show supporting computations in good form. b. Prepare a schedule showing the income statement effect for the year ended December 31, 2019, as a result of the facts above. Show supporting computations in good form
