On January 1, 2021, ABC Co. reported patent cost of P1,920,000 and related accumulated amortization of P240,000. The patent was purchased on January 1, 2019 at which date the remaining legal life was 16 years. On January 1, 2021, the useful life of the patent was determined to be only 8 years from the date of acquisition. On January 1, 2021, ABC Co. paid P800,000, of which three-fourths was for a trademark and one-fourth was for the other entity’s agreement not to compete for a 5-year period in the line of business covered by the trademark. ABC Co. considered the life of the trademark indefinite. Moreover, ABC Co. agreed to pay P50,000 to the other entity as consulting fee each year for 5 years payable every January 1. What is the total carrying amount of intangible assets on December 31, 2021?
On January 1, 2021, ABC Co. reported patent cost of P1,920,000 and related accumulated amortization of P240,000. The patent was purchased on January 1, 2019 at which date the remaining legal life was 16 years. On January 1, 2021, the useful life of the patent was determined to be only 8 years from the date of acquisition. On January 1, 2021, ABC Co. paid P800,000, of which three-fourths was for a trademark and one-fourth was for the other entity’s agreement not to compete for a 5-year period in the line of business covered by the trademark. ABC Co. considered the life of the trademark indefinite. Moreover, ABC Co. agreed to pay P50,000 to the other entity as consulting fee each year for 5 years payable every January 1. What is the total carrying amount of intangible assets on December 31, 2021?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 8P
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On January 1, 2021, ABC Co. reported patent cost of P1,920,000 and related accumulated amortization of P240,000. The patent was purchased on January 1, 2019 at which date the remaining legal life was 16 years. On January 1, 2021, the useful life of the patent was determined to be only 8 years from the date of acquisition.
On January 1, 2021, ABC Co. paid P800,000, of which three-fourths was for a trademark and one-fourth was for the other entity’s agreement not to compete for a 5-year period in the line of business covered by the trademark. ABC Co. considered the life of the trademark indefinite.
Moreover, ABC Co. agreed to pay P50,000 to the other entity as consulting fee each year for 5 years payable every January 1.
What is the total carrying amount of intangible assets on December 31, 2021?
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