Sponge Co. incurred research and development costs in 20x1 as follows:

Equipment acquired for use in various research and development projects

975,000

Depreciation on the above equipment

135,000

Materials used

200,000

Compensation costs of personnel

500,000

Outside consulting fees

150,000

Indirect costs appropriately allocated

250,000

The total research and development costs charge in Sponge's 20x1 statement of profit or loss should be:

_

2.Chair Leader Co. purchased a patent on January 1, 20x3 for 120,000. The patent had a remaining useful life of 10 years at that date. In January of 20x4, Chair incurred 54,000 in acquiring another patent that clearly extended the existing patent's life to 12/31/15. What amount of amortization expense would Chair record in 20x4?_ _

3.During 20x1, King Co. incurred the following costs:

Testing in search for process alternatives

720,000

Costs of testing prototype and design modifications

500,000

Modification of the formulation of a process

1,220,000

Research and development services performed by Queen Corp. for King

650,000

In King's 20x1 statement of profit or loss, research and development expense should be

_

4.Rachel Company has a Trademark for a new product at a cost of P240,000. The trademark has an estimated life of 10 years. At the start of 2006, the company paid legal fees of P97,500 for the successful defense of the trademark. The amortization of trademark for 2006 is?

5.Pozon Corporation purchased a franchise for an initial franchise fee of P3,744,000 on January 1, 2005. The franchise is granted for definite period of 15 years. The agreement provided the following terms and condition:

a.720,000 down payment upon signing of contract of January 1, 2005.

b.The balance is payable in 6 equal payments starting December 31, 2005 and is evidenced by a 12% interest bearing note.

Answer the following:

a.Amortization of franchise for the year 2005 _ _

b.Carrying value of the franchise at December 31, 2005

c.Interest expense for the year 2005 _

6.Dexter Company signed a contract on May 1, 2005 whereby the company was to pay P960,000 cash plus P204,000 annual rent for an office building. The contract is for 10 years. Improvements and alterations were made on the building at a cost of P450,000 and it has an estimated economic life of 15 years and a salvage value of P30,000.

Answer the following:

a.Amortization of leasehold for 2005 _

b.Carrying value of leasehold at December 31, 2005 _

c.Depreciation of leasehold improvements for 2005