Reference no: EM133179111
Question - The Department of Information and Communication Technology (DICT) has provided information on intangible assets as follows:
a. A patent was purchased from Patent Inc. for P4,000,000 on January 1, 2019. the agency estimates the remaining useful life of the patent to be 10 years. the patent was carried in Patent Inc.'s accounting records at a net book value of P4,000,000 when Patent Inc. sold it to DICT.
b. On January 1, 2020, a computer software was purchased from Software Inc. for P960,000. The agency uses 10-year useful life for computer software.
c. The following research and development costs were incurred by DICT in 2020:
|
Materials and equipment
|
284,000
|
|
Personnel
|
378,000
|
|
Indirect costs
|
204,000
|
|
Total
|
866,000
|
DICT estimates that these costs will be recouped by December 31, 2023. The materials and equipment purchased have no alternative uses.
d. On January 1, 2020, because of recent events in the field, DICT estimates that the remaining life of the patent purchased on January 1, 2019 is only 5 years from January 1, 2020.
e. In July 1, 2020, several computer software were purchased through non-exchange transactions at fair value of P500,000. The computer software has no finite useful life as determined by the agency.
Required -
1. Assuming that there is an active market for the computer software purchased from Software Inc. and the residual value amounted to P60,000, compute the total amount of charges against income for the year ended December 31, 2020?
2. What is the carrying amount of computer software assessed as having an indefinite useful life?