What is the carrying value of trademark as of December 31, 2022?
On March 1, 2022 Tulip purchased for P400,000 a trademark for a very successful soft drink it markets under the name PowPow! The trademark was determined to have an indefinite life. A competitor recently introduced a product that is in direct competition with the PowPow! product, thus suggesting the need for an impairment test. Data gathered by the entity suggests that the useful life of the trademark is still indefinite, but the cash flows expected to be generated by the trademark have been reduced either to P22,000 per year (with a probability of 60%) or to P33,000 per year (with 40% probability). The appropriate risk-free interest rate is 7%. The appropriate risk-adjusted interest rate is 12%. What is the carrying value of trademark as of December 31, 2022?
Group of answer choices
P377,143
P400,000
P368,291
P397,291
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