Smart Company incurred the following costs in 2021, in relation to developing a machine that will be
Question:
Smart Company incurred the following costs in 2021, in relation to developing a machine that will be used in manufacturing a product. Professional fees paid to consultants to conduct market study P 250,000 Fees paid to engineers and experts for initial research-- 150,000 Cost of equipment used for research.
The equipment will be used for other research projects. The useful life of the equipment is 5 years P300,000 Legal fees to obtain patent P100,000 Licensing fees paid to the patent office P 25,000 Legal costs paid to defend patent against infringement suit P 47,000
How much is the total R&D expense?
What is the cost of patent?
2. On January 2, 2021, Big company classified non current asset with a carrying amount of P2,400,000 as held for sale. On this date, the asset is expected to be sold for P2,300,000 with expected cost to sell of P100,000. By December 31, 2021,the asset's fair value is P2,400,000 with estimated disposal cost of P50,000. On January 10, 2022, the asset was sold for P2,000,000. Cost to sell amounts to P35,000 How much recovery on impairment is to be recognized on December 31, 2021?
3. During the year 2019, Strict Company acquired 10,000 ordinary shares of Lenient Company for P220,000 plus broker's commission of P 5,000. The shares acquired by Strict are intended for trading. The market value of these shares for the last three years are as follows: December 31, 2019---------P235,000 December 31, 2020---------P240,000 December 31, 2021---------P222,000 How much unrealized gain on equity investment is recognized in profit or loss for the year 2020?
4. Good Company purchased a franchise on July 1, 2021 for the following considerations: The company paid P1,000,000 and issued 10,000 shares of its P100 par ordinary shares on July 1, 2021. The company's ordinary share is selling at this date at P130 per share. Issued a non-interest bearing note for P3,000,000 payable semi-annually for three years every June 30 and December 31. the first payment is due on Dec. 31, 2021. The Company's credit rating indicates that it can borrow money at 8% per annum for a loan of this type. Information on present value factors (PV) are:
PV of an ordinary annuity of 1 at 8% for 3 periods-----------2.5771
PV of an annuity due at 4% for 6 periods---------------------5.4518
PV of an ordinary annuity of 1 at 4% for 6 periods-----------5.2421
What is the cost of Franchise acquired on July 1, 2021?
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson