Question
Transactions during 20x9 of the newly organized Baby G Company included the following: Jan. 2 Paid legal fees of P225,000 and stock certificate costs of
Transactions during 20x9 of the newly organized Baby G Company included the following:
Jan. 2 Paid legal fees of P225,000 and stock certificate costs of P124,500 to complete organization of the
corporation.
15 Hired a clown to stand in front of the corporate office for 2 weeks and hand out pamphlets and
candy to create goodwill for the new enterprise. Clown cost, P15,000; pamphlets and candy, P7,500.
April 1 Patented a newly developed process with costs as follows:
Legal fees to obtain patent P 643,500
Patent application and licensing fees 95,250
Total P 738,750
It is estimated that in 6 years other companies will have developed improved processes, making the
Baby G Company process obsolete.
Acquired both a license to use a special type of container and a distinctive trademark to be printed
on the container in exchange for 6,000 shares of Baby G's no-par ordinary shares selling for P75 per
share. The license is worth twice as much as the trademark, both of which may be used for 6 years.
July 1 Constructed a shed for P1,965,000 to house prototypes of experimental models to be developed in
future research projects.
Dec. 31 Incurred salaries for an engineer and chemist involved in product development totaling P2,625,000
in 20x9.
REQUIREMENTS:
1. Determine the cost of patent.
2. Determine the cost of licenses.
3. Determine the cost of trademark.
4. Determine the carrying amount of Intangible Assets.
5. Total amount resulting from the foregoing transactions that should be expensed when incurred.
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