Freetown Manufacturing company acquired three patents in January 2016.  The patents have different lives as indicated in the following schedule.   Cost Useful Life Legal Life Patent A 125,000 10 17 Patent B272,500 57 Patent C656,200Indefinite17   Patent C is believed to be uniquely useful as long as the company retains the right to use it.  In June 2017, the company unsuccessfully attempted to defend its right to Patent B.  Legal fees of P127,000 were incurred in this action.  The company's policy is to amortize intangible assets by the straight-line method to the nearest half year.  The company reports on a calendar-year basis.   Required: How much is amortization expense recorded on 12/31/17?___________ How much is the amount of write-down of patent B?_____________ Carrying value of patent A?___________ Carrying value of patent C?______

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 13E
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 Freetown Manufacturing company acquired three patents in January 2016.  The patents have different lives as indicated in the following schedule.

 

Cost Useful Life Legal Life

Patent A 125,000 10 17

Patent B272,500 57

Patent C656,200Indefinite17

 

Patent C is believed to be uniquely useful as long as the company retains the right to use it.  In June 2017, the company unsuccessfully attempted to defend its right to Patent B.  Legal fees of P127,000 were incurred in this action.  The company's policy is to amortize intangible assets by the straight-line method to the nearest half year.  The company reports on a calendar-year basis.

 

Required:

  1. How much is amortization expense recorded on 12/31/17?___________
  2. How much is the amount of write-down of patent B?_____________
  3. Carrying value of patent A?___________
  4. Carrying value of patent C?___________
    5. rules in answering the problem_____
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