Service Company markets products to real estate agents and to new homeowners, purchased a customer list for P600,000 on January 2, 2020. Because of turnover among real-estate agents and because new homeowners gradually become established homeowners, the list is expected to have economic value for only four years. The company uses the straightline method of amortization. In January 2021, the customer list was tested for impairment as a result of substantial turndown in the retail-estate market in the area. It is estimated that the customer list will generate future cash flows of P100,000 per year for the next three years and that the fair value (less cost to sell) of the customer list is P240,000. The market rate of interest on this date is 8%.What amount of impairment loss on customer lists should Service Company recognize?*

2 points

a. None

b. 210,000

c. 192,300

d. 450,000

Gola Company purchased a patent for 714,000 on January 1, 2017. The patent was being amortized over its remaining legal life of fifteen years expiring on January 2, 2032. Early on January 2, 2020, Gola determined that the economic benefits of patent would not last longer than ten years from the date of acquisition. What amount should be charged to patent amortization expense for the year ended December 31, 2020?*

2 points

a. 42,000

b. 142,800

c. 71,400

d. 81,600

On January 1, 2020, WISE Inc. acquired a patent with for P10,000,000 with remaining useful life of 5 years and remaining legal life of 10 years. On December 31, 2020, WISE was sued by a competitor on alleged patent infringement. WISE prevailed in the case and incurred litigation costs in successfully defending the patent in the amount of P2,000,000. On July 1, 2022, WISE sold the patent for P5,000,000 and incurred P500,000 disposal cost. What is the carrying value of the patent on December 31, 2021?*

2 points

a. P7,500,000

b. P7,200,000

c. P6,000,000

d. P8,000,000

On January 1, 2020, WISE Inc. acquired a patent with for P10,000,000 with remaining useful life of 5 years and remaining legal life of 10 years. On December 31, 2020, WISE was sued by a competitor on alleged patent infringement. WISE prevailed in the case and incurred litigation costs in successfully defending the patent in the amount of P2,000,000. On July 1, 2022, WISE sold the patent for P5,000,000 and incurred P500,000 disposal cost. Using the same data, what is the gain/(loss) on patent disposal to be recognized by WISE?*

2 points

a. (P1,500,000)

b. (P500,000)

c. (P1,750,000)

d. P500,000