EXAM About INTANGIBLE ASSETS 1
Uploaded by
BLACKPINKLisaRoseJisooJennieEXAM About INTANGIBLE ASSETS 1
Uploaded by
BLACKPINKLisaRoseJisooJennieEXAM about INTANGIBLE ASSETS 1
General Rule: Read the problems carefully and answer the following with solutions wisely. (5 points)
1. On January 1, 2019, Anton Company acquired an intangible asset from a foreign company. The invoice
price of the intangible was P10,000,000 subject to a 10% discount if acquired on a cash basis. Anton
Company paid P2,000,000 import duties and professional fees of P100,000 in relation to its acquisition.
At what amount should the intangible asset be initially recorded in the books of the Anton Company?
A. P9,000,000
B. P9,100,000
C. P11,000,000
D. P11,100,000
2. Baby Company acquired an intangible asset from Candy Company on May 1, 2019 by issuing 5,000,000
of its ordinary shares with a par value of P2.00 per share but currently selling in the stock exchange for
P3.00 per share and an additional amount of P2,000,000. Baby Company also pays P100,000 legal cost in
relation to the acquisition of the intangible asset. At what amount should the intangible asset be initially
recorded by Baby Company?
A. P10,100,000
B. P15,100,000
C. P17,000,000
D. P17,100,000
3. Divine Company exchanges the rights to distribute a product in Zamboanga which have a carrying
amount of P2,000,000 for cash of P500,000 and the rights to distribute the same product in Ipil. The fair
market value of the rights received is P1,700,000. The exchange is considered having the necessary
commercial substance. At the time of exchange, the intangible asset should be initially recorded by
Divine Company at
A. P1,500,000
B. P1,700,000
C. P2,000,000
D. P2,200,000
4. Emman Company purchases a trademark from an overseas company to manufacture items under the
trademark. Emman Company incurs the following costs in purchasing the trademark:
Amount paid for the trademark P8,000,000
Import duties 80,000
Legal fees (negotiating the deal and enduring the terms of the trademark are fair) 100,000
Training costs (required by overseas company before the trademark can be used) 20,000
Advertising new product 30,000
Cost of registering the trademark (required in terms of the agreement with supplier) 90,000
What amount should the trademark be initially recorded?
A. P8,180,000
B. P8,270,000
C. P8,290,000
D. P8,320,000
5. On July 1, 2019, Faith Company signed an agreement to operate as a franchise of McDoDo for an initial
franchise fee of P1,200,000. On the same date, Faith paid P400,000 and agreed to pay the balance in four
equal payments of P200,000 beginning July 1, 2020. The down payment is not refundable, and no future
services are required of the franchisor. Faith can borrow at 14% for a loan of this type. What is the
carrying value of the franchise to be reported on the December 31, 2021 statement of financial position
assuming the franchise has a definite life of 20 years?
A. P859,950
B. P982,800
C. P1,110,000
D. P1,352,000