Provide the necessary accounting entries: A patent right is acquired July 1,2021, for P250,000; while it has a legal life of 15 years, due to rapidly changing technology, management estimates a useful life of only five years. "Netting" method, straight-line amortization will be used. At January 1, 2022, management is uncertain that the process can actually be made economically feasible, and decides to write down the patent to an estimated market value of P75,000. Amortization will be taken over three years from that point. On January 1, 2024, having perfected the related production process, the asset is now appraised at a depreciated replacement cost of P300,000. Furthermore, the estimated useful life is now believed to be six more years.

Provide the necessary accounting entries: A patent right is acquired July 1,2021, for P250,000; while it has a legal life of 15 years, due to rapidly changing technology, management estimates a useful life of only five years. "Netting" method, straight-line amortization will be used. At January 1, 2022, management is uncertain that the process can actually be made economically feasible, and decides to write down the patent to an estimated market value of P75,000. Amortization will be taken over three years from that point. On January 1, 2024, having perfected the related production process, the asset is now appraised at a depreciated replacement cost of P300,000. Furthermore, the estimated useful life is now believed to be six more years.

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

Provide the necessary accounting entries: A patent right is acquired
July 1,2021, for P250,000; while it has a legal life of 15 years, due to
rapidly changing technology, management estimates a useful life of only
five years. "Netting" method, straight-line amortization will be
used. At January 1, 2022, management is uncertain that the process
can actually be made economically feasible, and decides to write down
the patent to an estimated market value of P75,000. Amortization will be
taken over three years from that point. On January 1, 2024, having
perfected the related production process, the asset is now appraised at a
depreciated replacement cost of P300,000. Furthermore, the estimated
useful life is now believed to be six more years.

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