The following audit notes were the exceptions noted by your audit staff assigned to audit Worth Corporation's Property, plant and equipment and Intangible assets as of and for the period ended December 31, 2019: a) On January 2018, a franchise agreement with Sony Corp. was signed by the company for the exclusive rights to distribute Sony Corp's product in the country for an indefinite period. The initial franchise fee was at P10,000,000. The amount is payable in 5 equal annual installments. The first payment was made upon signing of the contract. The prevailing market rate of interest on January 2018 was at 10%. The only entry made by the client in relation to the franchise was to debit the Franchise account at P10,000,000. No amortization nor impairment was recognized by the client. b) Several patents were acquired on January of 2015. These patents were registered 8 years before the said acquisition date, thus had been amortized by the client over their remaining legal life. The carrying value of these patents on the company's books at the end of 2019, before amortization was at P2,400,000. Legal fees amounting to P250,000 in successful defending a patent was incurred and was charged to the patent account at the beginning of 2017, thus the amortization for 2017 and 2018 included the amortization of the legal fees over the remaining life the patent as at the beginning of 2017. It was ascertained further by the client that one patent which originally cost P900,000 had a remaining useful life of 3 years as at the beginning of 2019. c) The company acquired a land with a building at the beginning of 2019 by issuing 60,000 of the company ordinary shares. The shares are currently selling in the active market at P42 per share on the transaction date. A mortgage of the property amounting to P3,500,000 was also assumed by the company. Brokerage fees and commissions were also paid at P380,000. 40% of the acquisition price is ascertained to be allocable to the land based on its relative fair value. Cost to remodel the building was incurred at P220,000. The remodeling however necessitated the demolition of a portion of the building. Proceeds from selling salvaged materials from the demolition amounted to P40,000. The building was made available for use on March 1, 2019. The building is estimated to be useful for 20 years with a 10% salvage value based on the initial cost. Depreciation shall be provided using the sum-of-years digits method. Requirements: 1. What is the correct carrying value of the franchise as of December 31, 2019? a. 7,727,273 c. 7,581,574a Salvage value based on t cost. Depreciation shall be provided using the sum-of-years digits method. Requirements: 1. What is the correct carrying value of the franchise as of December 31, 2019? a. 7,727,273 c. 7,581,574 b. 8,339,731 d. 6,671,785 2. What is the correct amortization expense on the patent for 2019? a. 456,250 c. 425,000 b. 400,000 d. 462,500 3. What is the correct carrying value of the patents as of December 31, 2019? a. 1,975,000 c. 1,756,250 b. 1,737,500 d. 1,800,000 4. What is the correct depreciation expense on the Building for the current year? a. 287,143 c. 319,048 b. 270,857 d. 344,571 You were assigned to audit the Property, Plant and Equipment of Ryan Corporation in line with the firm's continuing engagement to audit its financial statements as of and for the period