The TERRAN COMPANY acquired several small companies at the end of 2019 and based on the acquisitions, reported the following intangibles in its December 31, 2019, statement of financial position: .....Patent .......................P200,000 .....Copyright.....................400,000 .....Tradename..................350,000 ......Computer Software.....100,000 .......Goodwill..................... 900,000  The company’s accountant determines the patent has an expected life of 10 years and no expected residual value, and that it will generate approximately equal benefits each year. The company expects to use the copyright and tradename for the foreseeable future. The accountant knows that the computer software is used in the company’s 120 sales offices. The company has replaced the software in 60 offices in 2020, and expects to replace the software in 40 more offices in 2021 and the remainder in 2022.  On December 31, 2020, there are no indications of impairment of patent and computer software. The following information relates to the other intangible assets. a. Because of the rampant piracy, the copyright is expected to generate cash flows of just P50,000 per year. b. The tradename is expected to generate cash flows of P15,000 per year. c. The goodwill is associated with Terran’s SCV Manufacturing reporting unit. The cash flows expected to be generated by the SCV Manufacturing reporting unit is P200,000 per year for the next 25 years. The reporting unit has a carrying amount of P3,000,000. Determine the Total amortization of Intangible Assets in 2020

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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The TERRAN COMPANY acquired several small companies at the end of 2019 and based on the acquisitions, reported the following intangibles in its December 31, 2019, statement of financial position: .....Patent .......................P200,000 .....Copyright.....................400,000 .....Tradename..................350,000 ......Computer Software.....100,000 .......Goodwill..................... 900,000  The company’s accountant determines the patent has an expected life of 10 years and no expected residual value, and that it will generate approximately equal benefits each year. The company expects to use the copyright and tradename for the foreseeable future. The accountant knows that the computer software is used in the company’s 120 sales offices. The company has replaced the software in 60 offices in 2020, and expects to replace the software in 40 more offices in 2021 and the remainder in 2022.  On December 31, 2020, there are no indications of impairment of patent and computer software. The following information relates to the other intangible assets. a. Because of the rampant piracy, the copyright is expected to generate cash flows of just P50,000 per year. b. The tradename is expected to generate cash flows of P15,000 per year. c. The goodwill is associated with Terran’s SCV Manufacturing reporting unit. The cash flows expected to be generated by the SCV Manufacturing reporting unit is P200,000 per year for the next 25 years. The reporting unit has a carrying amount of P3,000,000. Determine the Total amortization of Intangible Assets in 2020.

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