Black Widow Corporation engaged you for the first time to audit their financial statements as of and for the period ended December 31, 2020. They presented the following balances of their intangibles as of December 31, 2020: P 1,317,500 Patent A 2,200,000 2,000,000 Patent B Patent C Trademark 1,000,000 Franchise 4,050,000 Relevant information related to the intangibles are as follows: • The entity incurred P800,000 research and development costs in 2019 related to the Patent A. Black Widow incurred 9750,000 for the application of the patent, and it was approved on July 2, 2019. The entity estimated that the useful life of the patent is 10 years. The entity capitalized all costs incurred related to the patent, including the research and development costs, and amortized the patent accordingly. • Patent B was purchased last January 2, 2020 for P2,500,000. Based from the previous owner's estimate, the remaining useful life of the patent upon purchase was 2 years, however, Black Widow expects to benefit from the patent for 5 years from the date of acquisition. On December 30, 2020, the entity successfully defended the patent from an infringement lawsuit. The company paid P200,000 legal expenses, which was capitalized by the entity. The entity amortized the patent accordingly. Black Widow applied for another patent (Patent C) on June 30, 2020. The entity incurred P2,000,000 for the registration of the patent, and expects to benefit from the patent for the whole duration of its legal life. However, the entity was not able to provide an amortization for this patent. The trademark was purchased last November 2, 2020 for P1,000,000. The useful life of the said trademark is deemed to be indefinite. By the end of 2020, the recoverable amount of the trademark is P1,050,000. • A franchise agreement was entered into by your client on January 2, 2020. The initial franchise fee is P5,000,000, and the franchise is good for 5. Black Widow is required to pay 5% of its annual revenue from the franchise. The entity generated P1,000,000 during 2020, and capitalized the additional payment made in 2020.