On January 1, 2013, Cecilia Company purchased a patent from an original patentee for P2,400,000. The...

  

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On January 1, 2013, Cecilia Company purchased a patent from an original patentee for P2,400,000. The remaining legal life of the patent is 15 years but the useful life is only 12 years. On January 1, 2014, the entity paid P550,000 in successfully defending the patent in an infringement suit filed against the entity. On January 1, 2015, the entity acquired a competing patent for P1,500,000. The competing patent has a remaining legal life of 15 years but it is not to be used because it was intended to protect the original patent. What is the carrying amount of the patent on December 31, 2015? 2. On January 1, 2012, Jericho Company purchased a patent for P7,140,000. The patent is being amortized over the remaining legal life of 15 years expiring on January 1, 2027. During 2015, the entity determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported for the patent, net of accumulated amortization, on December 31, 2015? 3. The owners of Rainier Company are planning to sell the business to new interests. The cumulative net earnings for the past five years amounted to P16,500,000 including expropriation loss of P1,500,000. Goodwill is measured by capitalizing excess earnings at 25% with normal earnings at 20%. The fair value of the net assets of the entity at current year-end was P10,000,000. What is the acquisition cost of the entity? 4. Iris Company purchased another entity for P8,000,000 cash. The assets and liabilities of the acquire are as follows: Carrying Amount Fair Value Cash Inventory In-process R&D Assembled workforce Liabilities What is the goodwill arising from the acquisition? 1,000,000 400,000 6,000,000 1,100,000 2,500,000 1,000,000 500,000 5,000,000 1,200,000 3,000,000 On January 1, 2013, Cecilia Company purchased a patent from an original patentee for P2,400,000. The remaining legal life of the patent is 15 years but the useful life is only 12 years. On January 1, 2014, the entity paid P550,000 in successfully defending the patent in an infringement suit filed against the entity. On January 1, 2015, the entity acquired a competing patent for P1,500,000. The competing patent has a remaining legal life of 15 years but it is not to be used because it was intended to protect the original patent. What is the carrying amount of the patent on December 31, 2015? 2. On January 1, 2012, Jericho Company purchased a patent for P7,140,000. The patent is being amortized over the remaining legal life of 15 years expiring on January 1, 2027. During 2015, the entity determined that the economic benefits of the patent would not last longer than ten years from the date of acquisition. What amount should be reported for the patent, net of accumulated amortization, on December 31, 2015? 3. The owners of Rainier Company are planning to sell the business to new interests. The cumulative net earnings for the past five years amounted to P16,500,000 including expropriation loss of P1,500,000. Goodwill is measured by capitalizing excess earnings at 25% with normal earnings at 20%. The fair value of the net assets of the entity at current year-end was P10,000,000. What is the acquisition cost of the entity? 4. Iris Company purchased another entity for P8,000,000 cash. The assets and liabilities of the acquire are as follows: Carrying Amount Fair Value Cash Inventory In-process R&D Assembled workforce Liabilities What is the goodwill arising from the acquisition? 1,000,000 400,000 6,000,000 1,100,000 2,500,000 1,000,000 500,000 5,000,000 1,200,000 3,000,000

Answer rating: 100% (QA)

Answer Carrying amount of the patent on December 31 2015 The carrying amount of the patent is the initial cost plus any subsequent costs like legal de... View the full answer