During 2022, Twenti Company, had the following transactions: On January 2, Twenti purchased the net assets of Terti Company for P360,000. The fair value of Terti’s identifiable net assets was P172,000, Twenti believes that, due to the popularity of Terti’s consumer products, the life of the resulting goodwill is unlimited. On February 1, Twenti purchased a franchise to operate a ferry service from the state government for P60,000 and an annual fee of 1% of ferry revenues. The franchise expires after five years. Twenti received P20,000 of ferry revenues in 2022. On April 5, Twenti granted a patent that had been applied for by Terti. During 2022, Twenti incurred legal costs of P51,000 to register the patent and an additional of P85,000 to successfully prosecute a patent infringement suit against a competitor. Twenti estimates the patent’s economic life to be ten years. Twenti has determine that it is appropriate to amortize these intangibles on the straight line basis over the maximum period permitted by generally accepted accounting principles, taking a full year’s amortization in the year of acquisition. Calculate the total expense to be recognized in 2022 income statement resulting from the foregoing intangible assets. A . 102,300 B. 111,700 C. 25,600 D. 35,200
During 2022, Twenti Company, had the following transactions:
On January 2, Twenti purchased the net assets of Terti Company for P360,000. The fair value of Terti’s
identifiable net assets was P172,000, Twenti believes that, due to the popularity of Terti’s consumer
products, the life of the resulting
On February 1, Twenti purchased a franchise to operate a ferry service from the state government for
P60,000 and an annual fee of 1% of ferry revenues. The franchise expires after five years. Twenti
received P20,000 of ferry revenues in 2022.
On April 5, Twenti granted a patent that had been applied for by Terti. During 2022, Twenti incurred
legal costs of P51,000 to register the patent and an additional of P85,000 to successfully prosecute a
patent infringement suit against a competitor. Twenti estimates the patent’s economic life to be ten
years.
Twenti has determine that it is appropriate to amortize these intangibles on the straight line basis over the
maximum period permitted by generally accepted accounting principles, taking a full year’s amortization
in the year of acquisition.
Calculate the total expense to be recognized in 2022 income statement resulting from the foregoing
intangible assets.
A
.
102,300 B. 111,700 C. 25,600 D. 35,200
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