Reference no: EM132635719
Question - Transactions during 2020 of the newly organized Uranus Company included the following:
Jan 2 Paid legal fees of P150,000 and stock certificate costs of P83,000 to complete organization of the corporation.
Jan 15 Hired a clown to stand in front of the corporate office for 2 weeks and hand out pamphlets and candy to create goodwill for the new enterprise. Clown cost, P10,000; pamphlets and candy, P5,000.
April 1 Patented a newly developed process with costs as follows:
Legal fees to obtain patent P429,000
Patent application and licensing fees 63,500
Total P492,500
It is estimated that in 6 years other companies will have developed improved processes, making the Uranus Company process obsolete.
May 1 Acquired both a license to use a special type of container and a distinctive trademark to be printed on the container in exchange for 6,000 shares of Uranus's no-par ordinary shares selling for P50 per share. The license is worth twice as much as the trademark, both of which may be used for 6 years.
July 1 Constructed a shed for P1,310,000 to house prototypes of experimental models to be developed in future research projects.
Dec 31 Incurred salaries for an engineer and chemist involved in product development totaling P1,750,000 in 2010.
Required -
a. Prepare the journal entries for the above transactions.
b. Determine the following:
i. Cost of patent
ii. Cost of licenses
iii. Cost of trademark
iv. Carrying amount of intangible assets as of December 31
v. Total amount that should be expensed