1. Harmonious Company acquired a patent for a drug with a remaining legal and useful life of six years on January 1, 2019 for P5,400,000. The entity used straiht line amortization. On January 1, 2021, a new patent was received for an improved version of the same drug. Thenew patent has a legal and useful life of twenty years. What amount should be recorded as amortization expense for 2021?
1. Harmonious Company acquired a patent for a drug with a remaining legal and useful life of six years on January 1, 2019 for P5,400,000. The entity used straiht line amortization.
On January 1, 2021, a new patent was received for an improved version of the same drug. Thenew patent has a legal and useful life of twenty years.
What amount should be recorded as amortization expense for 2021?
2. At the beginning of the current year, Hart Company signed an agreement to operate aa a franchise for an inital franchise fee of P6,000,000.
On the same date, the entity paid P2,000,000 and areed to pay the balance in four equal annual payments of P1,000,000 at every year-end.
The down payment is not refundable and no future services are required of the franchisor. The entity can borrow at 14% for a loan of this type.
Presen value of 1 at 14% for 4 preiods 0.59
Future amount of 1 at 14% for 4 periods 1.69
Present value of an ordinary annuity of 1 at 14% for 4 periods 2.91
What amount should be recorded as initial cost of the franchise?
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