On January1, 2021, an entity decided to declea of an existing patent from 10 years to 8 years. The patent was purchased on January 1, 2016 for P3,000,000. The estimated residual value is zero. The entity decided on January 1, 2021 to change the depreciation method from an accelerated method to the straight line method. On January, 2021, the cost of an equipment is P8,000,000 and the accumulated depreciation is P3,400,000. The remaining useful life of the equipment on January 1, 2021 is 10 years and the residual value of the patent is P200,000.What is the total charge against income for 2021 as a result of the accounting changes? * a. 940,000 O b. 960,000 O c. 627,500 O d. 647,500

On January1, 2021, an entity decided to declea of an existing patent from 10 years to 8 years. The patent was purchased on January 1, 2016 for P3,000,000. The estimated residual value is zero. The entity decided on January 1, 2021 to change the depreciation method from an accelerated method to the straight line method. On January, 2021, the cost of an equipment is P8,000,000 and the accumulated depreciation is P3,400,000. The remaining useful life of the equipment on January 1, 2021 is 10 years and the residual value of the patent is P200,000.What is the total charge against income for 2021 as a result of the accounting changes? * a. 940,000 O b. 960,000 O c. 627,500 O d. 647,500

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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Question

On January1, 2021, an entity decided to decrease the estimated useful life
of an existing patent from 10 years to 8 years. The patent was purchased on
January 1, 2016 for P3,000,000. The estimated residual value is zero. The
entity decided on January 1, 2021 to change the depreciation method from
an accelerated method to the straight line method. On January , 2021, the
cost of an equipment is P8,000,000 and the accumulated depreciation is
P3,400,000. The remaining useful life of the equipment on January 1, 2021
is 10 years and the residual value of the patent is P200,000.What is the
total charge against income for 2021 as a result of the accounting
changes? *
O a. 940,000
b. 960,000
c. 627,500
d. 647,500

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