On January 1, 2018, EM purchased a patent for a new consumer product for ₱4,800,000. At the time of purchase, the patent was valid for 10 years. However, the patent's useful life was estimated to be only 8 years due to the competitive nature of the product. On December 31, 2020, the product was permanently withdrawn from sale under government order because of a potential health hazard in the product. What amount should EM charge against income during 2020, assuming amortization is recorded at the end of the year? A. ₱ 600,000 B. ₱ 3,600,000 C. ₱ 3,000,000 D. ₱ 3,840,000
On January 1, 2018, EM purchased a patent for a new consumer product for ₱4,800,000. At the time of purchase, the patent was valid for 10 years. However, the patent's useful life was estimated to be only 8 years due to the competitive nature of the product. On December 31, 2020, the product was permanently withdrawn from sale under government order because of a potential health hazard in the product. What amount should EM charge against income during 2020, assuming amortization is recorded at the end of the year? A. ₱ 600,000 B. ₱ 3,600,000 C. ₱ 3,000,000 D. ₱ 3,840,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2018, EM purchased a patent for a new consumer product for ₱4,800,000. At the time of purchase, the patent was valid for 10 years. However, the patent's useful life was estimated to be only 8 years due to the competitive nature of the product. On December 31, 2020, the product was permanently withdrawn from sale under government order because of a potential health hazard in the product. What amount should EM charge against income during 2020, assuming amortization is recorded at the end of the year?
A. ₱ 600,000
B. ₱ 3,600,000
C. ₱ 3,000,000
D. ₱ 3,840,000
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