Karen Company purchased a 5-year license for Php 200,000. The company expects to renew the license at the end of the 5year period for a further 5 years. The government has indicated that they will re-grant the license to Karen Company.

Required: Based on the above facts, answer the following:

1. Assuming the cost associated with the renewal is Php 500, what is the amount to be recorded as amortization for the first year

2. Assuming the cost associated with the renewal is Php 195,000, what is the amount to be recorded as amortization for the first year?