Intangible asset 7:07 .il89acctg21. The Befort Company field for a palent on a new type of machine. The application costsbtaled P12,000. R&D costs incured to create the machine were P75,000. In the year inwhich the company filed for and received the patent, it spent P20,000 in the successfuldefense of a patent infringement suit.Required1. At what amount should the company capitalize the patent?2. How would you determine the economic life of the patent?2. On January 4, 2021, the Franc Company purchased for P27,000 a patent that had beenfled eight years earlier. The palent covers a manufacturing process that the companyplans to use for 15 years. On January 3, 2022, the company paid its lawyer P10,000 forSucessfully defending the patent in a lawsuit..RequiredPrepare all the journal entries associated with the patent in 2021 and 2022.3. On January 11, 2022, The Hughes Company applied for a tradename. Legal costsassociated with the application were P20,000. In January 2023, the company incurredP8,000 of legal fees in a successful defense of its tradename. The tradename was notimpaired in 2022 and 2023.RequiredCompute the ending carrying value of the tradename for 2022 and 2023. Should thecompany amortize the tradename?4. The KLK Clothing Company manufactures professionals clothing for women. In order tokeep costs lowwhile still producing quality clothes, KLK conducts many research anddevelopment projects. On a current project KLK researchers used P35,000of cotton andP27,000 of wool from its inventory. KLK paid its researchers P30,000 in wages andpurchased a special weaving machine for P60,000 cash. The machine was not suitablebruse in production activities and was not expected to be used in other researchprojects. In addition, depreciation of the project's research lab amounted to P20,000.RequiredPrepare the journal entry to record KLK's research and development costs.5. In 2020, Lalli Coporation incurred R&D costs as follows:Materials and equipmentP100,000Personnel100,000Indirect costs50,000P250,000These cost relate to a product that will be marketed in 2021. The Company estimates thatthese costs will be recouped by December 31, 2024.Required29What is the amount of R&D costs expense in 2020?

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1. The Befort Company field for a patent on a new type of machine. The application costs btaled P12,000. R&D costs incured to create the machine were P75,000. In the year in which the company fled for and received the patent, it spent P20,000 in the successful deferse of a patent infringement suk. Required 1. At what amount should the company capitalize the patent? 2. How would you determine the economic life of the patent?

1. The Befort Company field for a patent on a new type of machine. The application costs btaled P12,000. R&D costs incured to create the machine were P75,000. In the year in which the company fled for and received the patent, it spent P20,000 in the successful deferse of a patent infringement suk. Required 1. At what amount should the company capitalize the patent? 2. How would you determine the economic life of the patent?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 7MC

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