You noted the following items relative to the company's Intangible assets in connection with your audit of the Paete Corporation's financial statements for the year 2010. 0 On January 1, 2010, Paete signed an agreement to operate as franchisee of Clear Copy Services, Inc. for an initial franchise of P680,000. Of this amount, P200,000 was paid when the agreement was signed and the balance was payable in four annual payments of P120,000 each, beginning January 1, 2011. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The implicit rate for a loan of this type is 14%. The agreement also provides the 5% of the revenue from the franchise must be paid to the franchisor annually. Paete's revenue from the franchise for 2010 was P8,000,000. Paete estimates that the useful life of the franchise to be ten years. 0 Paete incurred P624,000 of experimental and development costs in its laboratory to develop a patent which was granted on January 2, 2010. Legal fees and other costs associated with the registration of the patent totaled P131,200. Paete estimates that the useful life of the patent will be eight years. D A trademark was purchased from Tsek Company for P320,000 on July 1, 2007. Expenditures for successful litigation in defense of the trademark totaling P80,000 were paid on July 1, 2010. Paete estimates that the trademark's usefull life will be indefinite Based on the above and the result of your audit, determine the following: (Round off present value factors to 4 decimal places) 1. Total expenses related to franchise in 2010 a. P503,914 b. P535,200 c. P448,950 d. P454,964 2. Carrying amount of franchise as of December 31, 2010 D519 6AM h P494 680 ~ D124 640 d D123 497