CHAPTER 22 : INTANGIBLE ASSETS
PROBLEM 1:
1. False
2. False
3. True
4. True
5. True
6. True
7. True
8. False
9. True
10. True
PROBLEM 2:
1. D
2. B
3. 10,000 x 95% x 46 = 437,000 + 25,000= 462,000
4. 230,000 +120,000 = 350,000
5. 120,000 + 180,000 = 300,000
6. 100,000 + 80,000 = 180,000
7. 7,800,000 + 5,225,000 - 4,800,000 = 13,025,000
8. 0
9. D
10.D
11.D
12. 50,000 + 60,000 = 110,000
13. D
14. Solution:
January 1, 20x3
Patent 30,000
Cash 30,000
December 31,20x3
Amortization Expense 1,500
Accumulated Depreciation 1,500
January 1, 20x4
Legal fees expense 9,000
Cash 9,000
December 31, 20x4
Amortization Expense 1,500
Accumulated depreciation 1,500
15. 100,000
16. 600,000-640,000 = (40,000)
17.600,000
18. Case 1: 0
Case 2: 30,000
19.D
20. 37,500 ; EXPENSED
Problem 3
1. Requirement (a) : No commercial substance
Big’s books
Publishing title- Ms. Jane Ballpen 4,400,000
Publishing title- Mr. Juan Lapis 4,400,000
Bigger’s books
Publishing title- Ms. Jane Ballpen 4,200,000
Publishing title- Mr. Juan Lapis 4,200,000
Requirement (b) : With commercial substance
Big’s books
Publishing title- Ms. Jane Ballpen 4,500,000
Publishing title- Mr. Juan Lapis 4,400,000
Gain on exchange 100,000
Bigger’s books
Publishing title- Ms. Jane Ballpen 4,500,000
Publishing title- Mr. Juan Lapis 4,200,000
Gain on exchange 300,000
2. Solution:
Amortization expense 700,000
Accumulated depreciation 700,000
3. Design cost of trademark 1,500,000
Legal fees registering trademark 150,000
Registration fee with patent office 50,000
Total 1,700,000
4. Special equipment used solely on R&D activities
for the newly invented product 720,000
Labor and material costs incurred in producing
a prototype model 2,400,000
Cost of testing the prototype 960,000
Total 4,080,000
5. Design of tools, jigs, mold, and dies involving
new technology 85,000
Modification to the initial design of a prototype 67,500
Laboratory research aimed at discovery of new tech 107,500
Amortiziation of other intangible assets used in R&D 30,000
Total 290,000
6. Design, construction and testing of preproduction
prototypes and models 240,000
Research and development services performed by Billit 180,000
Testing in search for new products or process alternative 210,000
Total 630,000
7. A.
Costs to compute a detailed design 1,560,000
Costing and testing costs to establish tech feasibility 1,200,000
R&D expense 2,760,000
B.
Coding and testing cost after tech feasibility 5,280,
Costs of producing the product master 1,800,000
Intangible Asset 7,080,000
C.
Reproduction costs of software from the product matter 3,000,000
Packaging costs for the products 1,080,000
Inventory 4,080,000
8. Purchase price 1,200,000
Less: Downpayment (240,000)
Notes payable 960,000
Divide by: 5
Annual installment 192,000
Downpayment 240,000
PV of Note payable 692,117
Total cost of patent 932,117
Multiply by: 2/13
Accumulated Depreciation 143,403
9. 700,000 /20 years = 35,000
10. 140,000
11.Patent 116,000
Ordinary shares 70,000
Share premium 46,000
12. 20,000/10 = 2,000
13. 0
14. R&D expense:
Development costs prior to reaching technological feasibility 400
Amortization expense:
Development cost after reaching technological feasibility 200
Cost of duplicating salable product 450
Total expense 1,050
15.95,000 + 25,000 +30,000 = 150,000
