Professional Documents
Culture Documents
CHAPTER 6
INTANGIBLE ASSETS
Discussion Question No. 21
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.
q.
r.
6-1.
6-2.
P140,000
51,300
70,800
P262,100
(b)
(c)
P 41,790
5
P 8,358
(d)
P41,790
8,358
P33,432
7,500
14,100
38,100
P 59,700
11,940
P 47,760
(May Company)
Patents
Cost
P192,000
Less accumulated amortization 36,000+(156,000/8) 55,500
License
Cost (100 x 600 x 2/3)
P 40,000
Less accumulated amortization (40,000/4)
10,000
Trademark
Cost (100 x 600 x 1/3)
P 20,000
Less accumulated amortization (20,000/4)
5,000
Goodwill (12M 9M)
Total intangible assets
63
P 136,500
30,000
15,000
3,000,000
P3,181,500
6-3.
(July, Inc.)
2009
Jan. 3
Patents
Cash
196,000
196,000
2009-2010
Dec. 31
19,600
Legal Fees
Cash
28,000
Amortization Expense
Accumulated Amortization-Patents
19,600
Patents
Cash
60,000
Amortization Expense
Accumulated Amortization-Patents
196,000 (19,600 x 5) = 98,000
(98,000 + 60,000) / 10 = 15,800
15,800
19,600
2011
Jan. 1
2011-2013
Dec. 31
28,000
19,600
2014
Jan. 1
2014-2016
Dec. 31
60,000
15,800
2017
July 1
6-4.
Amortization Expense
Accumulated Amortization-Patents
15,800 x 6/12 = 7,900
7,900
102,700
153,300
256,000
(ToGo Company)
Carrying value
Recoverable value
150,000/10% = 1,500,000 x 80%
300,000/10% = 3,000,000 x 20%
Impairment loss
6-5.
7,900
P4,000,000
P1,200,000
600,000
1,800,000
P2,200,000
(Boston Company)
(a)
P 50,000
(b)
P350,000
150,000
P200,000
(c)
P150,000
P600,000
100,000
P500,000
(d)
64
50,000
P100,000
P200,000
50,000
150,000
P350,000
6-6.
(Summer Company)
2014
R & D Expense
Cash
500,000
Patents
Cash
Amortization Expense
Accumulated Amortization-Patents
120,000
500,000
2015
Jan. 1
Dec. 31
120,000
12,000
12,000
2016
Jan. 1
Patents
Cash
1,200,000
1,200,000
2016-2017
Dec. 31
Amortization Expense
Accumulated Amortization-Patents
(120,000-12,000) + 1,200,000 = 1,308,000
1,308,000/15 = 87,200
87,200
87,200
2017
Dec. 31
6-7.
1,320,000
(April Company)
Laboratory research
Modification of formulation
Testing
Searching for application
Depreciation of equipment (280,000/5)
R & D costs for 2016
6-8.
1,133,600
186,400
P 68,000
26,000
24,000
19,000
56,000
P193,000
(Autumn Company)
a.
2016
Franchise
Cash
Dec. 31
31
b.
Dec. 31
6,250,000
6,250,000
500,000
Amortization Expense
Accumulated Amortization-Franchise
6,250,000/10 = 625,000; 625,000 x 1/2
312,500
Amortization Expense
Accumulated Amortization-Patents
750,000 x 9.5/10 = 712,500; 712,500/5
142,500
500,000
312,500
142,500
c.
R & D Expense
Equipment
Accumulated Depreciation-Equipment
Cash
2,300,000
1,000,000
100,000
3,200,000
6-9.
(b)
R & D Expense
Software Costs
Cash
800,000
500,000
Amortization Expense
Accumulated Amortization-Software Costs
125,000
1,300,000
65
125,000
6-10.
(Sun Company)
(a)
Downpayment
Present value of future payments
300,000 x 2.4869
Total cost
(b)
Dec. 31
31
2017
Jan. 1
P 124,607
Franchise
Discount on Notes Payable
Cash
Notes Payable
Interest Expense
Discount on Notes Payable (10% x 746,070)
Amortization Expense
Accumulated Amortization-Franchise
1,246,070
153,930
500,000
900,000
74,607
74,067
124,607
124,607
Notes Payable
Cash
300,000
300,000
(Winter Company)
(a)
(b)
6-12.
746,070
P1,246,070
(c)
2016
Jan. 1
6-11.
P 500,000
P7,000,000
6,240,000
P 760,000
1,000,000
1,700,000
5,900,000
760,000
760,000
1,600,000
7,000,000
(b)
300,000
300,000
P13,100,000
13,400,000
P
300,000
P12,400,000
13,400,000
P 1,000,000
400,000
P
600,000
1,000,000
600,000)
depreciation Building (6.2/13 x 600,000)
amortization Patents (1/13 x 600,000)
amortization Trademarks (.8/13 x 600,000)
66
400,000
230,769
286,154
46,154
36,923
D
D
C
B
B
MC6
MC7
MC8
MC9
MC10
A
C
D
A
D
MC11
MC12
MC13
MC14
MC15
B
D
B
D
C
MC16
MC17
MC18
MC19
MC20
B
A
B
D
C
Problems
MC21
Patents
Franchise
Total cost of intangible assets
P244,000
100,000
P344,000
MC22
MC23
Trademarks
Patents
Total intangible assets
P750,000
150,000
P900,000
MC24
Initial payment
Present value of four annual payments (100,000 x 2.91)
Cost of franchise
P200,000
291,000
P491,000
MC25
P48,000
12,500
10,000
P70,500
MC26
P12,500
27,250
38,600
P78,350
MC27
P17,000
MC28
Cost
Accumulated amortization (34,000 x 1.5 years)
Carrying value, January 1, 2015
MC29
MC30
P1,000,000
MC31
Laboratory research
Testing for evaluation of new products
Modification of formulation of plastic products
Searching for application of new research findings
Total research and development expense
MC32
Depreciation of equipment
Materials used in R & D
Compensation cost of personnel in R & D
Outside consulting fees for R & D work
Indirect costs appropriately allocated to R & D
Total research and development expense
67
P340,000
51,000
P289,000
P57,800
P0
P68,000
24,000
6,000
19,000
P117,000
P210,000
300,000
400,000
220,000
260,000
P1,390,000
MC33
MC34
MC35
MC36
MC37
P50,000
MC38
P48,000
MC39
P240,000
200,000
P440,000
10 years
P44,000
MC40
P440,000
154,000
P286,000
MC41
Cost of patent
Accumulated amortization (270,000/10 = 27,000; 27,000 x 4)
Carrying amount, beginning of 2015
Revised depreciation expense for 2015 (162,000/3)
Patent, net of accumulated amortization, December 31, 2015
OR 270,000 x 6/10 x 2/3 = 108,000
P270,000
108,000
P162,000
54,000
P108,000
MC42
SL =1/5 = 20%
Revenue = 25%
Depreciation is the higher rate, 25%; thus carrying amount is
MC43
MC44
MC45
P19,000
P216,000
P45,000
P 90,000
540,000
P630,000
75%
SL rate = = 25%
Revenue = 2.4M/12M = 20%
Amortization in 2016: Higher rate is 25%; 25% x 6M
P1,500,000
P1,800,000
P750,000
MC46
Purchase price
Fair value of net assets (115.0M 52.5M)
Goodwill
P70,000,000
62,500,000
P7,500,000
MC47
Goodwill
P1,000,000
68