Trademark 18. On January 2, 20x4, Blue Co. bought a trademark from Shoes, Inc. for P300,000. The carrying amount of the trademark in Shoes, Inc.'s books is P240,000. Case 1: How much is the amortization expense in 20x4? Case 2: In addition to the previous facts, an independent research company estimated that the remaining useful life of the trademark was 10 years. How much is the amortization expense in 20x4? (Adapted) 19. Theoretically, copyrights should be amortized over a. their legal life. b. the life of the creator plus fifty years. c. twenty years. d. their useful life or legal life, whichever is shorter. (Adapted) 20. On January 1, 20x0, Watts Company purchased a copyright for P600,000, having an estimated useful life of 16 years. In January 20x4, Watts paid P90,000 for legal fees in a successful defense of the copyright. Copyright amortization expense for the year ended December 31, 20x4, should be R L 2

Trademark 18. On January 2, 20x4, Blue Co. bought a trademark from Shoes, Inc. for P300,000. The carrying amount of the trademark in Shoes, Inc.'s books is P240,000. Case 1: How much is the amortization expense in 20x4? Case 2: In addition to the previous facts, an independent research company estimated that the remaining useful life of the trademark was 10 years. How much is the amortization expense in 20x4? (Adapted) 19. Theoretically, copyrights should be amortized over a. their legal life. b. the life of the creator plus fifty years. c. twenty years. d. their useful life or legal life, whichever is shorter. (Adapted) 20. On January 1, 20x0, Watts Company purchased a copyright for P600,000, having an estimated useful life of 16 years. In January 20x4, Watts paid P90,000 for legal fees in a successful defense of the copyright. Copyright amortization expense for the year ended December 31, 20x4, should be R L 2

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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On July 1, Duffy Company purchased a copyright for $6363. The copyright has an estimated useful life of 3 years and Duffy uses straight-line amortization. How should the copyright be treated in Duffy's December 31 financial statements? Choose the closest answer. a. Capitalized as an intangible asset with a net balance of $6363 on the balance sheet. b. Expensed in the amount of $6363 on the income statement c. Capitalized as an intangible asset with a net balance of $5302 on the balance sheet. d. Capitalized as an intangible asset with a net balance of $4242 on the balance sheet.
Ramsay Enterprises incurred research and development costs of $450,000 and legal fees of $18,000 to acquire a patent. The patent has a legal life of 15 years and a useful life of 9 years. What amount should Ramsay record as Patent Amortization Expense in the first year? O $52,000 O $31,200 O $1,200 O $2,000
On January 1, 2018, Sneezy Company purchased patent at a cost of P1,920,000 at which date the remaining legal life was 16 years. On January 1, 2020, the useful life of the patent was determined to be only 8 years from the date of acquisition. On January 1, 2020, the entity 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 amortization of intangible assets for 2020?
2. JPIA Company spent P1, 920, 000 in acquiring a patent on January 3, 2016. Due to the competitive nature of the product, the patent was estimated to have a useful life of 10 years. At the beginning of 2018, the company paid P240, 000 for legal fees in a successful defense of the patent. On July 1, 2022, a competitor obtained rights to a patent which made JPIA's patent obsolete. How much is the loss from the patent obsolescence?
Kleen Company acquired patent rights on January 10 of Year 1 for $881,100. The patent has a useful life equal to its legal life of eight years. On January 7 of Year 4, Kleen successfully defended the patent in a lawsuit at a cost of $49,200. Required: a. Determine the patent amortization expense for Year 4 ended December 31. b. Journalize the adjusting entry on December 31 of Year 4 to recognize the amortization. Refer to the Chart of Accounts for exact wording of account titles
Requirements: a. How much would Lexicon record as amortization expense for this patent for the year ending December 31, 20x5? b. How much is the carrying of the patent on December 31, 20x5?
Solving. On January 1, 200A, ABC Company sells to XYZ, a used transportation equipment, which was acquired at P800,000, 5 years ago. The carrying value of the equipment is P500,000. There is no established selling price for the equipment. Upon executing the sale, ABC received P100,000 down payment and a 12% promissory note which gives the holder the right to collect 150,000 annually starting December 200A until December 200C, when the interest rate prevailing in the market is 13%. At the end of December 200A, the carrying value of the current portion of note receivable is (Round off the resulting present value of the note to the nearest hundreds.)
Rover Company purchases copyrights for P200,000 and incurs professional legal fees amounting to P20,000 related to the purchase made. After the purchase, Rover Company incurred operating expenses of P60,000. The estimated economic life is 40 years. What is the initial cost of copyright to be recorded in the books of Rover Company? P200,000 P180,000 P220,000 P280,000
On January 1, 2017, Reno Company purchased a copyright for $1,000,000, having an estimated useful life of 16 years. In January 2021, Reno paid $150,000 for legal fees in a successful defense of the copyright. What should be the amount of copyright amortization expense for the year ended December 31, 2021?
Blue Co. purchased a patent from the inventor for $36,000 on March 1, 20X6. Blue Co.’s fiscal year-end is December 31 each year. On the March 1, 20X6 purchase date, the remaining legal life of the patent was 6 years based on the original legal life of 20 years less 14 years since the patent was registered. Also on the March 1, 20X6 purchase date, the estimated remaining useful life of the patent for Blue Co.’s purposes is 3 years. Blue Co. amortizes patent costs in the year of acquisition for the portion of the year the patent was held. What is the patent’s book or carrying value as of December 31, 20X7? a. $14,000 b. $12,000 c. $22,000 d. $10,000
On December 1, 20x1, PRC Co acquired all the identifiable assets and liabilities ofBOA Co for P3,000,000. BOA's net identifiable assets were valued at P2,180,000.This amount included a provisional amount of P150,000 assigned to the patent towhich the fair value is not readily determinable. BOA tentatively amortized the patentover 5 years using a straight-line method in 20x1. On July 1, 20x2, an independentappraiser determined that the patent's fair value on the acquisition date wasP70,000, and the remaining useful life as of that date is 3 years. Additionally, onSeptember 1, 20x2, the stock market crashed due to a pandemic. Various tradingsecurities acquired from BOA with an acquisition date fair value of P400,000 nowhave a fair value only of P120,000. How much should be the amount of adjustmentsto restate the goodwill?
On September 30, 2014, Leeds LTD, acquired a potent in conjunction with the purchase of another company. The potent, valued at $6 million, was estimated to have a 10-year life and no residual value. Leeds user the straight-line method of amortization for intangible assets. At the beginning of January 2016, Leeds successfully defended its patent against infringement. Litigation costs totaled $500,000. Requireal: 1. Calculate amortization of the potent for 2014 and 2015. 2. Prepare the journal entry to record the 2016 litigation costs. 3. Calculate amortization for 2016. Repeat requirements 2 and 3 assuming that Leeds prepares its financial statements according to IFRS.