LUNA COMPANY began operations on January 2, 2011. Shown below is the

balances of its INTANGIBLE ASSETS as of December 31, 2019.

Patents - P1,650,000

Franchise agreement - 285,000

Organization costs - 306,000

Goodwill - 1,035,000

Additional Information:

1. Patents, acquired January 2, 2012, are being amortized over an

expected useful life of 14 years. Repairs made to equipment covered by

the patents costing P225,000 were debited to the account in January

2016. It is further determined on December 31, 2018, that one of the

patents has a remaining life of only 2 years. This patent was originally

assigned a cost of P630,000.

2. A franchise agreement was signed on January 1, 2019. A P150,000 fee

was paid, covering a 5-year period, at the end of which the company may

renew the agreement by paying P150,000. A decision on renewal has not

been made as of December 31, 2019. The agreement calls for an annual

payment of 5% of revenue. An entry debiting the account for P135,000

was made at the time of the cash payment for 2019.

3. Organization costs include the unamortized portion of amounts paid to

promote for services rendered at the inception of the corporation. These

fees have been amortized since inception over an estimated 40-year life.

4. Goodwill account includes the following: P135,000 - legal expenses

relative to i0ncorporation. These were assigned to the account in January

2011; P600,000 excess of cost over assigned fair value of identifiable net

assets of an enterprise acquired in early 2017; in 2016 P300,000 paid to

an advertising consulting firm for a major advertising effort.

A. Answer the following:

1. What is the carrying value of the Patents on December 31, 2019?

Final Answer: _____________ 2pts.

Supporting Computations: __________________8pts.

2. What is the carrying value of the Franchise Agreement on December 31, 2019?

Final Answer: _______________ 2pts.

Supporting Computations: __________________ 3pts.

3. What is the carrying value of the Organization Costs on December

31, 2019?

Final Answer: _______________ 2pts.

Supporting computations: ________________2pts.

4. What is the carrying value of Goodwill on December 31, 2019?

Final Answer: _______________ 2pts.

Supporting computations: ____________________2pts.

5. What is the total Patent amortization for 2019?

Final Answer: _________________2pts.

Supporting computations: ______________________3pts.

B. Audit adjusting entries at December 31, 2019. (including amortization of Intangible Assets for the year 2019)- 6 adjusting entries x 3pts each =18pts

13. A one-sided hypothesis test is to be performed with significance level of 0.05. Suppose that the null hypothesis is false. If a significance level of 0.01 were to be used instead of a significance level of 0.05, which of the following would be true? A. Neither the probability of a Type II error nor the power of the test would change. B. Both the probability of a Type II error and the power of the test would decrease. C. Both the probability of a Type II error and the power of the test would increase. D. The probability of a Type II error would decrease and the power of the test would increase. E. The probability of a Type II error would increase and the power of the test would decrease.N U rab W E G H K S D Caps Lock A N M Z X shift T LE Alt MORE ABOUT HYPOTHESIS TESTING (a) 4 with power .80 (b) 8 with power .80 (c) 8 with power .50 (d) 10 with power .80 11.23 For each set of alternatives listed next, check the recommended default value, that is, the value that you should adopt unless there is a compelling reason to the contrary. (a) one-tailed, lower tail critical test one-tailed, upper tail critical test two-tailed test (b) .10 level of significance lo . '05 level of significance .01 level of significance (c) power of .50 _1/15 power of .80 . 05 power of .95SKILL BUILDER 2 In Exercises 4.124 to 4.127, we are conducting many hypothesis tests to test a claim. In every case, assume that the null hypothesis is true. Approximately how many of the tests will incorrectly find significance? 4.124 100 tests conducted using a significance level of 5%. 4.125 300 tests using a significance level of 1%. 4.126 40 tests using a significance level of 10%. 4.127 800 tests using a significance level of 5%.The following statement forms part of the Neyman-Pearson lemma for a test of sizea of the hypotheses Ho versus Hi about a single parameter 0: LR = L(01 ; X) L(60; X) 2 A . (a) State the null and alternative hypotheses referred to above. [2 marks]~ (b) What desirable property does the test obtained using the Neyman- Pearsonlemma possess in this case? [2 marks]~ (c) Consider the following likelihood function for a single parameter 0 based on *, the mean of a sample of n observations from a particular distribution.~ L(0;X) = c . exp(-n0) Onx where c is a fixed but unknown constant.