PROBLEM 7The following expenditures were incurred by JMV Company in connection with its newlydeveloped product:1. Construction of long-range research facility for use in current and future projects. Cost2,000,000; estimated useful life is 10 years2. Acquisition of R & D equipment for use on current project only. Cost P100,000;estimated useful life is 4 years.3.Acquisition of machinery for use on current and future R & D projects. Cost P50,000;estimated useful life is 5 years.4. Purchase of materials worth P60,000 for use on current and future R & D projects.P18,000 of the materials purchased were on hand at the end of the year.5. Salaries of research staff designing new product P120,000.6. Research costs incurred under contract for another company, and billable monthly,P15,000.7. Material, labor, and overhead costs of prototype of new product(economic viability notachieved), P53,0008.Cost of testing prototype and design modifications (economic viability not achieved).,P32,000.9. Legal fees to obtain patent, P15,000.10. Executive salaries, P124,000.11. Cost of marketing research to promote the product, P45,000.12. Engineering costs incurred to advance the product to full production stage (economicviability achieved), P62,000.13. Costs of successfully defending patent, P13,000.14. Commissions to sales staff marketing new product, P19,000.69. How much should be capitalized as intangible asset?a.P15,000b.P62,000C.P77,000d.P80,00070. How much should be recognized as R&D expense?a.P707,000b.P654,000C.P347,000d.P557,000

Answered: Image /qna-images/answer/b23a5439-4b96-4978-a0a7-c32037155853.jpg

Answered: a. P15,000 b. P62,000 C. P77,000 d.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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a. P15,000 b. P62,000 C. P77,000 d. P80,000 70. How much should be recognized as R&D expense? a. P707,000 b. P654,000 C. P347,000