Sailor Company's has brought the entity from previous owners through a leverage management buy-in (MBI). The company incurred a total transaction cost related to the MBI in the amount of P5,000,000 which was broken into the following specific costs: P1,000,000 related to the issue of own equity instrument, P1,500,000 related to the issue of debt instrument and P2,500,000 for the consultants and lawyers fees. The management proposes to capitalize the P5,000,000 as intangible asset. What amount should the company recognize as an intangible asset?
Sailor Company's has brought the entity from previous owners through a leverage management buy-in (MBI). The company incurred a total transaction cost related to the MBI in the amount of P5,000,000 which was broken into the following specific costs: P1,000,000 related to the issue of own equity instrument, P1,500,000 related to the issue of debt instrument and P2,500,000 for the consultants and lawyers fees. The management proposes to capitalize the P5,000,000 as intangible asset. What amount should the company recognize as an intangible asset?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sailor Company's has brought the entity from previous owners through a leverage management buy-in (MBI). The company incurred a total transaction cost related to the MBI in the amount of P5,000,000 which was broken into the following specific costs: P1,000,000 related to the issue of own equity instrument, P1,500,000 related to the issue of debt instrument and P2,500,000 for the consultants and lawyers fees. The management proposes to capitalize the P5,000,000 as intangible asset.
What amount should the company recognize as an intangible asset?
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