Safehouse Company was granted a patent on a product on January 1, 2011 with 20 -year useful life. To protect the patent, the entity purchased on January 1, 2021 for P4,500,000 a patent on competiting product which was originaly issued on January 1, 2016. Because of the unique plant, the entity does not feel the competing patent can be used in producing a product. What amount should be recorded as amortization of the competing patent for 2021? 2. Gray Company was granted a patent on January 1, 2018 and appropriately capitalized P450,000 of related costs. The entity was amortizing the patent over the useful life of 15 years. During 2021, the entity paid P150,000 in legal costs in successfully defending an attempted infringement of the patent. After the legal action was completed, the entity sold the patent to the plaintiff for P750,000. The policy is to take no amortization in the year of disposal. What amount should be reported as gain from sale of patent in 2021?
Safehouse Company was granted a patent on a product on January 1, 2011 with 20 -year useful life. To protect the patent, the entity purchased on January 1, 2021 for P4,500,000 a patent on competiting product which was originaly issued on January 1, 2016. Because of the unique plant, the entity does not feel the competing patent can be used in producing a product. What amount should be recorded as amortization of the competing patent for 2021? 2. Gray Company was granted a patent on January 1, 2018 and appropriately capitalized P450,000 of related costs. The entity was amortizing the patent over the useful life of 15 years. During 2021, the entity paid P150,000 in legal costs in successfully defending an attempted infringement of the patent. After the legal action was completed, the entity sold the patent to the plaintiff for P750,000. The policy is to take no amortization in the year of disposal. What amount should be reported as gain from sale of patent in 2021?
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter7: Operating Assets
Section: Chapter Questions
Problem 76APSA
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1. Safehouse Company was granted a patent on a product on January 1, 2011 with 20
-year useful life.
To protect the patent, the entity purchased on January 1, 2021 for P4,500,000 a patent
on competiting product which was originaly issued on January 1, 2016.
Because of the unique plant, the entity does not feel the competing patent can be used in
producing a product.
What amount should be recorded as amortization of the competing patent for 2021?
2. Gray Company was granted a patent on January 1, 2018 and appropriately capitalized P450,000 of related costs.
The entity was amortizing the patent over the useful life of 15 years.
During 2021, the entity paid P150,000 in legal costs in successfully defending an attempted
infringement of the patent.
After the legal action was completed, the entity sold the patent to the plaintiff for P750,000. The policy is to take no amortization in the year of disposal.
What amount should be reported as gain from sale of patent in 2021?
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