Jeremiah Corporation has provided the following information on intangible assets as follows: a. A patent was purchased from Isaiah Company for P5,000,000 on January 1, 20x1. On the acquisition date, the patent was estimated to have a useful life of 10 years. The patent had a net book value of P5,000,000 when Isaiah sold it to Jeremiah. b. On February 2, 20x2, a franchise was purchased from Daniel Company for P2,160,000. The contract that runs for 20 years provides that 5%of revenue from the franchise must be paid to Daniel. Revenue from the franchise for 20x2 was P8,000,000. c. Jeremiah incurred the following research and development costs in 20x2: Materials and equipment Personnel P462,000 657,000 329,000 P1,448,000 Indirect costs Total Because of the recent events, Jeremiah, on January 1, 20x2, estimates that the remaining useful life of the patent purchased on January 1, 20x1, is only five (5) years from January 1, 20x2. 1. On December 31, 20x2, the carrying value of the patent should be 2. The unamortized cost of the franchise at December 31, 20x2 should be 3. How much should be charged against Jeremiah's income for the year ended December 31, 20x2?

Jeremiah Corporation has provided the following information on intangible assets as follows: a. A patent was purchased from Isaiah Company for P5,000,000 on January 1, 20x1. On the acquisition date, the patent was estimated to have a useful life of 10 years. The patent had a net book value of P5,000,000 when Isaiah sold it to Jeremiah. b. On February 2, 20x2, a franchise was purchased from Daniel Company for P2,160,000. The contract that runs for 20 years provides that 5%of revenue from the franchise must be paid to Daniel. Revenue from the franchise for 20x2 was P8,000,000. c. Jeremiah incurred the following research and development costs in 20x2: Materials and equipment Personnel P462,000 657,000 329,000 P1,448,000 Indirect costs Total Because of the recent events, Jeremiah, on January 1, 20x2, estimates that the remaining useful life of the patent purchased on January 1, 20x1, is only five (5) years from January 1, 20x2. 1. On December 31, 20x2, the carrying value of the patent should be 2. The unamortized cost of the franchise at December 31, 20x2 should be 3. How much should be charged against Jeremiah's income for the year ended December 31, 20x2?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11EA: The following intangible assets were purchased by Goldstein Corporation: A. A patent with a...

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