Jeremiah Corporation has provided the following information on intangible assets as follows: a. A patent was purchased from Isaiah Company for P5,000,000 on January 1, 20x1. On the acquisition date, the patent was estimated to have a useful life of 10 years. The patent had a net book value of P5,000,000 when Isaiah sold it to Jeremiah. b. On February 2, 20x2, a franchise was purchased from Daniel Company for P2,160,000. The contract that runs for 20 years provides that 5%of revenue from the franchise must be paid to Daniel. Revenue from the franchise for 20x2 was P8,000,000. c. Jeremiah incurred the following research and development costs in 20x2: Materials and equipment Personnel P462,000 657,000 329,000 P1,448,000 Indirect costs Total Because of the recent events, Jeremiah, on January 1, 20x2, estimates that the remaining useful life of the patent purchased on January 1, 20x1, is only five (5) years from January 1, 20x2. 1. On December 31, 20x2, the carrying value of the patent should be 2. The unamortized cost of the franchise at December 31, 20x2 should be 3. How much should be charged against Jeremiah's income for the year ended December 31, 20x2?
Jeremiah Corporation has provided the following information on intangible assets as follows: a. A patent was purchased from Isaiah Company for P5,000,000 on January 1, 20x1. On the acquisition date, the patent was estimated to have a useful life of 10 years. The patent had a net book value of P5,000,000 when Isaiah sold it to Jeremiah. b. On February 2, 20x2, a franchise was purchased from Daniel Company for P2,160,000. The contract that runs for 20 years provides that 5%of revenue from the franchise must be paid to Daniel. Revenue from the franchise for 20x2 was P8,000,000. c. Jeremiah incurred the following research and development costs in 20x2: Materials and equipment Personnel P462,000 657,000 329,000 P1,448,000 Indirect costs Total Because of the recent events, Jeremiah, on January 1, 20x2, estimates that the remaining useful life of the patent purchased on January 1, 20x1, is only five (5) years from January 1, 20x2. 1. On December 31, 20x2, the carrying value of the patent should be 2. The unamortized cost of the franchise at December 31, 20x2 should be 3. How much should be charged against Jeremiah's income for the year ended December 31, 20x2?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education