On January 1, 2021, Ebasan reported patent cost of P1,920,000 and related accumulated amortization ofP240,000. 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 & years from the date ofacquisition.On January 1, 2021, Ebasan paid P800,000, of which three-fourths was for a trademark and one-fourth was forthe other entity's agreement not to compete for a 5-year period in the line of business covered by thetrademark. The entity considered the life of the trademark indefinite.Moreover, the entity agreed to pay P50,000 to the other entity as consulting fee each year for 5 years payableevery January 1. What is the total carrying amount of intangible assets on December 31, 2021?

Assets are resources that are controlled which results from prior transactions that are expected to…

Answered: On January 1, 2021

Business

Accounting

On January 1, 2021

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

On January 1, 2021, Ebasan 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 & years from the date of
acquisition.
On January 1, 2021, Ebasan 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. The entity considered the life of the trademark indefinite.
Moreover, the entity 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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