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What amount should gray report as gain from sale of patent

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Q1. Christian Gray Corp. was granted a patent on January 1, 2015 and appropriately capitalized P550,000 of related costs. Gray was amortizing the patent over its estimated life of 15 years. During 2018, Gray paid P250,000 in legal costs in successfully defending an attempted infringement of the patent. After the legal action was completed, Gray sold the patent to the plaintiff for P850,000. Gray's policy is to take no amortization in the year of disposal. In its 2018 income statement, what amount should Gray report as gain from sale of patent?

Q2. The following are the summary of the activities related to various research and development for a product:

-1996-1997 research conducted to develop the product, P3,840,000

-January 5, 1998 design and construction prototype, P876,000

-March 15, 1998 testing the prototype models, P420,000

-January 2, 1999 legal and other professional fees to process the patent application (useful life=legal life), P620,000

-December 10, 2001 legal fees paid to successfully defend the device patent, P357,000

-January 3, 2003 acquisition of a competitive patent aimed at protecting old patent, P406,000

-January 5, 2004 acquisition of the related patent which extended the life of the patents for additional two years, P654,375

-December 31, 2006 legal fees paid in unsuccessful patent infringement suit against a competitor, P250,000

What is the cost of the patent upon initial recognition?

Reference no: EM132957443

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