Reference no: EM132933489
Questions -
Q1) On January 1, 2019, WOKE CORP. (a non-VAT registered company) purchased software from LOL CORP. for $100,000 when the exchange rate is P1: $0.0250. A 5% discount is available on the purchase. A 12% VAT was also paid due to the importation. Installation and testing costs amounted to P180,000. Costs of introducing a new product or service amounted to P 50,000 and costs of staff training is P 30,000.
On April 1, 2019, WOKE purchased another intangible asset on a deferred settlement basis with a price of P 300,000.00. The cash price equivalent of the asset is P 250,000.
Legal fees and other professional fees paid amounted to P 50,000 while administration and overhead costs amounted to P40,000.
WOKE traded its intangible asset to YOLO CORP. for another intangible asset on June 30, 2019. The details on such exchange transaction are as follows:
WOKE, Fair value- P350,000
YOLO, Fair value- P400,000
WOKE, carrying value- P400,000
YOLO, carrying value- P250,000
WOKE paid YOLO a cash amount equivalent to the difference in the fair values of the intangible assets.
What is the total cost of intangible assets?
a. P5,186,000
b. P5,136,000
c. P4,680,000
d. P4,730,000
Q2) On January 2, 2019, Blink Company acquired an investment property, and the initial cost of investment property was P5,000,000. On the date of acquisition, the company chooses the cost model to account for its investment. As of December 31, 2020, it has carrying value of P4,900,000 and a fair value of P5,100,000.
On December 31, 2021, the company decided to transfer the investment property to owner-occupied property that is also under the cost model. On the date of transfer, the fair value of property is 5,000,000 while its carrying value was P4,800,000.
What amount of gain or loss on transfer should Blink recognize on December 31, 2021?
a. P300,000 loss
b. None
c. P100,000 loss
d. P200,000 gain
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