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    EXAM About INTANGIBLE ASSETS 2

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    BLACKPINKLisaRoseJisooJennie
    This document provides 5 multiple choice questions that test understanding of accounting for intangible assets such as patents, licenses, and research and development costs. The questions cover topics such as calculating patent amortization amounts, determining carrying values of licenses, and identifying which costs qualify for capitalization related to development projects.

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    EXAM About INTANGIBLE ASSETS 2

    Uploaded by

    BLACKPINKLisaRoseJisooJennie
    701 views3 pages
    This document provides 5 multiple choice questions that test understanding of accounting for intangible assets such as patents, licenses, and research and development costs. The questions cover topics such as calculating patent amortization amounts, determining carrying values of licenses, and identifying which costs qualify for capitalization related to development projects.

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    EXAM about INTANGIBLE ASSETS 2

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    This document provides 5 multiple choice questions that test understanding of accounting for intangible assets such as patents, licenses, and research and development costs. The questions cover topics such as calculating patent amortization amounts, determining carrying values of licenses, and identifying which costs qualify for capitalization related to development projects.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    701 views3 pages

    EXAM About INTANGIBLE ASSETS 2

    Uploaded by

    BLACKPINKLisaRoseJisooJennie
    This document provides 5 multiple choice questions that test understanding of accounting for intangible assets such as patents, licenses, and research and development costs. The questions cover topics such as calculating patent amortization amounts, determining carrying values of licenses, and identifying which costs qualify for capitalization related to development projects.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    EXAM about INTANGIBLE ASSETS 2

    General Rule: Read the problems carefully and answer the following with solutions wisely. (10 points)

    1. Gandhi Company purchased a patent on January 1, 2019 for P428,400. The patent was being amortized
    over its remaining legal life of 15 years expiring on January 1, 2034. On January 1, 2022, Gandhi
    determined that the economic benefits of the patent would not last longer than 10 years from the date of
    acquisition. What amount should be reported in the balance sheet as patent, net of accumulated
    amortization at December 31, 2025?
    A. P146,880
    B. P195,840
    C. P244,800
    D. P302,400

    2. On January 2, 2019, Hanna Company paid P500,000 to acquire a patent with a remaining economic
    useful life of 15 years. Hanna Company expects to use the patent for 5 years and intends to sell it after 5
    years. Inno Company has committed to buy the patent for 40% of the cost to Hanna Company. In its
    December 31, 2019, what amount of patent amortization should Hanna Company report in its profit or
    loss?
    A. P40,000
    B. P60,000
    C. P100,000
    D. P200,000

    3. Javier Company has a broadcasting license that expires in 5 years. As of January 1, 2019, the license has
    a carrying amount of P1,800,000. The license is renewable and has already been renewed twice in the
    past. During the current year 2019, the broadcasting authority has decided that in the future it will auction
    the licenses when they came up for renewal. As a result of this development, the company’s renewal
    option is no longer assured. The license has a remaining life of three years as of January 1, 2019. In the
    December 31, 2019 statement of financial position, how much should be reported as the carrying value of
    the broadcasting license?
    A. None
    B. P1,200,000
    C. P1,600,000
    D. P2,000,000

    4. Kiki Company incurred P298,350 of research and development cost to develop a product for which a
    patent was granted on January 2, 2019. Legal fees and other costs associated with registration of the
    patent totaled P109,200. On January 2, 2025, Kiki Company paid P90,000 for legal fees for the litigation
    put up against the patent. The patent has a useful life of 20 years. The final verdict was known on July 1,
    2025 in favor of Kiki Company. What total amount of expense Kiki Company should report in its 2025
    profit or loss related to the patent?
    A. P5,460
    B. P90,000
    C. P95,460
    D. P166,440

    5. The R&D division of Lola Company undertakes both research and development activities of the
    company. Its current development project on a prototype is near completion. The cost identified in this
    project consists of the following:
    Cost of materials used P5,000,000
    Salaries of consultants for the projects 2,000,000
    Fees to register trade design 50,000
    Amortization of patent used in the project 100,000
    Selling and administrative overheads allocated 1,000,000
    Initial operating losses 500,000
    Training costs to operate the asset 100,000
    Total P8,750,000

    The other costs that relate to this project are the salaries of scientists and technicians (P1,200,000) and
    depreciation of equipment used in the research and development activities (P900,000). Management estimates that
    about one third of these costs relate to the development project. What amount of development costs that should be
    capitalized?
    A. P7,150,000
    B. P7,850,000
    C. P8,250,000
    D. P8,750,000

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