On January 1, 2018, Laica Company purchased a patent from an original patentee for P2,400,000. The remaining life of the patent is 15 years but the useful life is only 12 years. On January 1, 2019, the entity paid P550,000 in successfully defending the patent in an infringement suit filed against the entity. On January 1, 2020, an entity acquired a competing patent for P1,500,000. The competing patent has a remaining life of 15 years but it is not used because it was intended to protect the original patent. Assume that the company is an SME. What is the carrying amount of the patent on December 31, 2020?
On January 1, 2018, Laica Company purchased a patent from an original patentee for P2,400,000. The remaining life of the patent is 15 years but the useful life is only 12 years. On January 1, 2019, the entity paid P550,000 in successfully defending the patent in an infringement suit filed against the entity. On January 1, 2020, an entity acquired a competing patent for P1,500,000. The competing patent has a remaining life of 15 years but it is not used because it was intended to protect the original patent. Assume that the company is an SME. What is the carrying amount of the patent on December 31, 2020?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2018, Laica Company purchased a patent from an original patentee for P2,400,000. The
remaining life of the patent is 15 years but the useful life is only 12 years. On January 1, 2019, the
entity paid P550,000 in successfully defending the patent in an infringement suit filed against the
entity. On January 1, 2020, an entity acquired a competing patent for P1,500,000. The competing
patent has a remaining life of 15 years but it is not used because it was intended to protect the original
patent.
Assume that the company is an SME. What is the carrying amount
of the patent on December 31, 2020?
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