Intermediate Accounting Exam 11
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BLACKPINKLisaRoseJisooJennieIntermediate Accounting Exam 11
Uploaded by
BLACKPINKLisaRoseJisooJennieINTERMEDIATE ACCOUNTING EXAM 11
General Rule: Please, read all the questions properly, observe carefully the problems, and answer the following
with intelligence. You must put your solutions at the back of the paper, which is written clearly and readable.
WARNING! Cheating is not allowed, being caught on act of cheating that person/s will face a great consequence. (25
Points)
1. Penk Company reported the following assets at year-end:
Financial asset held for trading 1,000,000
Goodwil 1,500,000
Prepaid Insurance 50,000
Patent 2,500,000
Customer List 500,000
What amount should be reported as total intangible assets at year-end?
a. 4,000,000
b. 5,500,000
c. 4,500,000
d. 3,000,000
2. Reyd Company has bought the entity from previous owners through a leveraged management buy-in (MBI). The
company incurred a total transaction cost related to the MBI in the amount of P5,000,000 which was broken into
the following specific costs: P1,000,000 related to the issue of own equity instrument, P1,500,000 related to the
issue of debt instrument and P2,500,000 for the consultants and lawyers fees. The management proposes to
capitalize the P5,000,000 as intangible asset.
What amount should the company recognize as an intangible asset?
a. None
b. 2,500,000
c. 4,000,000
d. 5,000,000
3. Bloo Company exchanges the rights to distribute a product in Brisbane which have a carrying amount of
P2,000,000 for cash of P1,000,000 and the right to distribute the same product in Canberra, with a fair value of
P1,400,000. The exchange is considered having the necessary commercial substance.
At the time of exchange, the intangible assets should be initially recorded by Bloo Company at
a. 1,000,000
b. 1,400,000
c. 2,000,000
d. 2,400,000
4. Bayolet Company incurred P1,600,000 of research and development costs to develop a product for which a patent
was granted at the beginning of the current year. Legal fees and other costs associated with registration of the
parent totalled P300,000. At year-end, the entity paid P450,000 for legal fees in a successful defense of the patent.
What is the total amount that should be capitalized for the patent at year-end?
a. 750,000
b. 300,000
c. 2,050,000
d. 2,350,000
5. Indeygo Company acquired a patent for a drug with a remaining legal and useful life of six years on January 1,
2018 for P5,400,000. On January 1, 2020, a new patent is received for an improved version of the same drug. The
new patent has a legal and useful life of twenty years.
What is the amortization expense for 2020?
a. 900,000
b. 200,000
c. 180,000
d. 300,000