Laguna Company acquired three patents in January 2005. The patents have different lives as indicated in the following schedule:     Cost Remaining useful life Remaining legal life   Patent A 2,000,000 10 8   Patent B 3,000,000 5 10   Patent C 6,000,000 Indefinite 15     Patent C is believed to be uniquely useful as long as the company retains the right to use it. In June 2005, the company successfully defended its right to Patent B. Legal fees of P800,000 were incurred in this action. The companys policy is to amortize intangible assets by the straight-line method to the nearest half year. The company reports on a calendar-year basis. The amount of amortization that should be recognized for 2005 is  A. 1,330,000 B. 1,250,000 C. 2,050,000 D.   950,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Laguna Company acquired three patents in January 2005. The patents have different lives as indicated in the following schedule:

 

 

Cost

Remaining useful life

Remaining legal life

 

Patent A

2,000,000

10

8

 

Patent B

3,000,000

5

10

 

Patent C

6,000,000

Indefinite

15

 

 

Patent C is believed to be uniquely useful as long as the company retains the right to use it. In June 2005, the company successfully defended its right to Patent B. Legal fees of P800,000 were incurred in this action. The companys policy is to amortize intangible assets by the straight-line method to the nearest half year. The company reports on a calendar-year basis. The amount of amortization that should be recognized for 2005 is 

A. 1,330,000

B. 1,250,000

C. 2,050,000

D.   950,000

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