Transactions during the current year of the newly organized Corporation included the following:

• Paid legal fees of P60,000 and stock certificate costs of P20,000 to complete organization of the Corporation;
• Hired temporary employee for 2 weeks to hand out pamphlets and candy, P15,450;
• Patented a newly developed process with cost as follows:

- Legal fees to obtain the patent, P550,000

- Patent application and licensing fees, P65,000

- It is estimated that in 5 years other companies will have developed improved similar process, making the patent process obsolete.

• Acquired both license to use a special type of container and a distinctive trademark to be printed on the container in exchange for 6,000 ordinary shares selling at P50 per share.The license is worth twice as much as the trademark, both of which may be used for 4 years.
• Constructed a shed for P355,000 to house prototypes or experimental models to be developed in future research projects. Incurred salaries for an engineer and a chemist involved in product development totaling P200,400 in the current year.

How much should be recognized as total initial cost of the Trademark?

a.

P200,000

b.

P300,000

c.

P615,000

d.

P100,000

Which of the following items would qualify as an intangible asset?

a.

College tuition fees paid to employees who enroll in an executive MBA program

b.

Legal costs paid to intellectual property lawyers to register a patent

c.

Operating losses during the initial stages of the project

d.

Advertising and promotion on the launch of a huge product

Subsequent expenditures on an intangible asset are generally recognized asexpenseunless they provide economic benefits in excess of the originally assessed standard of performance

True

False

On January 1, 20x1, Entity A registers a patent for a total registration and legal costs of 600,000. Entity A estimates that the patent has a remaining useful life of 25 years. How much is the amortization expense for 20x1?3 points

a.

P16,000.00

b.

P30,000.00

c.

P0.00

d.

P24,000.00

On April 1, 2015, Purple Corp. purchased all the assets and assumed all the liabilities of Sable Corp. for P140,000 cash.Sable's total identifiable asset values were as follows:carrying value of assets, P200,000 (estimated fair value, P230,000).Sable's total liabilities were P105,000.The amount of goodwill purchased by Purple Corp. was

a.

P45,000

b.

P15,000

c.

P30,000

d.

P75,000

On January 1, 2020, Thick Company purchased patent from the inventor, who asked P110,000 for it.Thick paid for the patend as follows:cash P40,000; issuance of 1,000 shares of its own ordinary shares, par P10 (market value, P20 per share); and a note payable due at the end of three years, face amount P50,000, noninterest-bearing.The interest rate for this type of financing is 12%.The PV of 1 at 12% for 3 years is 0.71178 while the PV of an annuity of 1 at 12% for 3 years is 2.69005.Thick Company should record the cost of the patent at

a.

P85,589

b.

P95,589

c.

P194,503

d.

P110,000

Intangible assets with_____ useful lifeare amortized over the shorter of the asset's useful life and legal life.