ABC Company acquired a patent right on July 1, 2019 for P500,000. The asset has a legal life of 15 years but due to the rapidly changing technology, management estimated a useful life of only five years. On December 31, 2020, management is uncertain that the process can actually be made economicallt feasible and decides to write down the patent to its recoverable amount of P150,000. Amortization will taken over three years from that time. a. Determine tge amortization expense for the year 2019. b. Determine the impairment loss recognized in 2020. c. Determine the Patent carrying value at December 31, 2021.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

ABC Company acquired a patent right on July 1, 2019 for P500,000. The asset has a legal life of 15 years but due to the rapidly changing technology, management estimated a useful life of only five years.

On December 31, 2020, management is uncertain that the process can actually be made economicallt feasible and decides to write down the patent to its recoverable amount of P150,000. Amortization will taken over three years from that time.

 

a. Determine tge amortization expense for the year 2019.

b. Determine the impairment loss recognized in 2020.

c. Determine the Patent carrying value at December 31, 2021.

Expert Solution
steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Accounting for Intangible assets
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education