Reference no: EM132741910

Question: 1. ONG Co. purchased a patent on January 1, 2018 for P300,000. The patent was being amortized over its remaining legal life of 15 years. During 2020, ABC Co. determined that the economic benefits of the patent would not last longer than 10 years from the date of acquisition. What amount should be charged to patent amortization expense for the year ended December 31 2020?

2. On January 1, 2020, CAN Co. issued 9% bonds in the amount of P2,500,000, which mature on January 1, 2030. The bonds were issued for P2,347,500 to yield 10%. Interest is payable annually on December 31. The entity uses the interest method of amortization. What is carrying amount of the bonds payable on June 30, 2020?

3. LIX Company issued 120,000 ordinary shares, of which 5,000 shares were held as treasury on January 1, 2020. The following were the transactions during the year: May 1 1,000 treasury shares were sold. Aug 1 10,000 unissued shares were sold. Nov 15 A 2 for 1 share split took effect. Determine the number of shares issued and outstanding on December 31, 2020.

4. BOB Company has 2,000 shares of 5%, P100 par non-cumulative preference share outstanding at December 31, 2020. No dividends have been paid on this share for 2019 or 2020. Compute the dividends in arrears at December 31, 2020.

5. On Jan. 1, 2020, GARFI Company granted XYZ, its executive, compensatory share options to buy 10,000 share of P10 par value. The options call for a price of P20 per share and are exercisable in 3 years following grant date. XYZ exercised the options on December 31, 2020. The market price of the share was P60 on January 1, 2020 and P70 on December 31,2020. The fair value of the share option is P30 on the date of grant. By what net amount should equity increase as a result of the grant and exercise of the options?

6. On January 1, 2020, GALLON Company granted ABC, its president 20,000 share appreciation rights for past services. These rights are exercisable immediately and expire on January 1, 2022. During exercise, ABC is entitled to receive cash for the excess of the share market price on the exercise date over the market price on the grant date. ABC did not exercise any of the rights during 2020. The market price of GALLON's share was P30 on January 1, 2020 and P45 on December 31, 2020. As a result of the share appreciation rights, GALLON should recognize compensation expense for 2020 of?

7. COMB Co. issued 20,000 shares of its P25 par value ordinary shares and 4,000 shares of its P50 par value preference shares for a total of P350,000 cash and an equipment with acquisition cost of P900, 000, book value of P450, 000 and fair value of P500, 000. On that date, the fair value of ordinary shares is P30. How much is allocated to the preference shares? For the solution to be attached, prepare the journal entry to record the issuance of the shares.