Reference no: EM132888035

Question - Information concerning Tulip Corporation's intangible assets is as follows: On January 1, 2020, Tulip signed an agreement to operate as a franchisee of Flower Service, Inc. for an initial franchise fee of Php 850,000. Of this amount Php 250,000 was paid when the agreement was signed and that balance was payable in four annual payments of Php 150,000 each. Beginning January 1, 2021. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value of January 1, 2020 of the four annual payments discounted at 14% (the implicit rate for a loan of this type) is Php 437,000. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Tulip's revenue from the franchise for 2020 was Php 900,000. Tulip estimates the useful life of the franchise to be ten years.

Tulip incurred Php 780,000 of experimental and development costs in its laboratory to develop a patent which was granted on January 2, 2020. Legal fees and other costs associated with the registration of the patent totaled Php 164,000. Tulip estimates that the useful life of the patent will be eight years. A trademark was purchased from Group Company for Php 400,000 on July 1, 2017. Expenditures for successful litigation in defense of the trademark totaling Php 102,000 were paid on July 1, 2020. Tulip estimates that the trademark's useful life will be twenty years from the date of acquisition. On expiration date, the trademark will no longer provide any benefits.

How much would be the carrying value of the intangibles in the December 31, 2020 balance sheet?