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- Smith Co. filed suit against Western, Inc., seeking damages for patent infringement. Western’s legal counsel believes it is probable that Western will have to pay an estimated amount in the range of $75,000 to $175,000, with all amounts in the range considered equally likely. How should Western report this litigation?a. As a liability for $75,000 with disclosure of the range. b. As a liability for $125,000 with disclosure of the range. c. As a liability for $175,000 with disclosure of the range. d. As a disclosure only. No liability is reported.Mayer Corporation owns equipment with a book value of $190,000. The equipment has a fair value less costs to sell of $175,000, and its value-in-use is $170,000. Mayer should recognize a loss on impairment of $Banana Co. incurred P 350,000 of research and development costs to develop a product for which a patent was granted on January 2, 20x1. Legal fees and other costs associated with registration of the patent totaled P 100,000. On March 31, 20x6, Banana Co. paid P 150,000 for legal fees in a successful defense of the patent. What total amount is capitalized for the patent through March 31, 20x6?
- 9. During 2021, Rockon Company, Inc. incurred $240,000 in legal fees in defending a patent against an infringement with a carrying value of $2,500,000. Rockon’s lawyers were successful with the defense of the patent. The legal fees should be a. expensed in 2021 and classified as ordinary expenseb. classified as an extraordinary item on the income statement for 2021c. capitalized and amortized over the remaining legal life of the patentd. capitalized and amortized over the remaining economic life or legal life of the patent,whichever is shorterExcel Co. agreed to pay 10% royalty to National Corp. for the use of intellectual property rights of Excel Co. requires to make sales to its customers. Excel Co's sales for the period amounts to P1,000,000. In providing the goods and services itself, Excel Co. is the principal in the sales made with its customers. What is the amount of revenue to be recognized by Excel in its financial statements? 100,000900,0001,000,0001,100,000Smith Co. filed suit against Western, Inc., seeking damages for patent infringement. Smith’s legal counsel believes it is probable that Western will have to pay $125,000, although no final settlement has yet been reached. How should Smith report this litigation? a. As an asset for $125,000.b. As a gain for $125,000.c. As both an asset and a gain for $125,000.d. No asset or gain is reported.
- X Corporation opted to deduct OSD. The following are the results of its operation: Net sales -P3,450,000; Cost of Sales – P2,100,000; Dividend from Y Corporation, a domestic corporation – P150,000; Gain on sale of Building – P200,000; Selling Expenses – P70,000; Administrative Expenses – P30,000. What is the taxable net income? A. P 930,000 B. P 1,020,000 C. P 870,000 D. P 810,000On January 1, 20x1, Ai Inc. acquired all the assets and liabilities of Pon Corp. forP1,200,000. Pon Corpassets and liabilities have a fair value of P2,500,000 andP1,300,000, respectively.Additional Information:● Ai is the exclusive distributor of Pon's products. The agreement has aremaining term of five years. The contract does not have any cancellationclause.● The agreement has a fair value of P400,000, of which 30% is "at the market.”The off-market component is unfavorable to the Ai Inc.● No assets and liabilities related to the contract were recognized.How much is the "gain of bargain purchase" to be recognized by Ai Inc. as a result ofthe business combination?Wickum Corporation reports under IFRS, and recognized a $500,000 other-than-temporary impairment of anHTM debt investment in Right Corporation. Subsequently, the fair value of Wickum’s investment in Rightincreased by $300,000. How would Wickum account for that increase in fair value?
- Firm OCS sold business equipment with a $23,000 initial cost basis and $10,015accumulated tax depreciation. In each of the following cases, compute OCS’srecaptured ordinary income and Section 1231 gain or loss on the sale.Required:a. Amount realized was $10,600.b. Amount realized was $13,600.c. Amount realized was $18,100.d. Amount realized was $26,100.Note: For all requirements, losses should be indicated with a minus sign. Leave nocell blank. Enter "0" for cells that do not have an amount.X Corporation opted to deduct OSD. The following are the results of its operation: Net sales -P3,450,000; Cost of Sales – P2,100,000; Dividend from Y Corporation, a domestic corporation – P150,000; Gain on sale of Building – P200,000; Selling Expenses – P70,000; Administrative Expenses – P30,000. What is the taxable net income? P 930,000 P 1,020,000 P 870,000 P 810,00010. XYZ Co had the following accounts at the time it was acquired by ABC Inc (see image below). ABC paid P1,400,000 for the net assets of XYZ. It was determined that the fair market value of inventories and PPE were P133,000 and P900,000 respectively. There is an assumed contingent liability arising from past events with a fair value amounting to P10,000 and such amount is considered a reliable measurement. Compute for a) Cost of Acquisition and b) goodwill or gain from acquisition (two answers)