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What amount should Kang record as amortization

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Q1. LB acquired a fast food franchise for a P50,000 cash down-payment and in addition gave a P150,000 one year noninterest bearing note payable. The implicit interest rate is 12%. LB also agreed to pay the franchisor P100,000 per year for the next ten years for promotional campaigns, accounting, and related services by the franchiser. The PV of P1 at 12% for 1 year is 0.89286 while the PV of ordinary annuity at 12% for 1 year is 1.000. What amount should LB record as the cost of the franchise?

Q2. On January 1, 2017, Kang Company purchased a new patent for P10,200 and started amortizing it over the legal life of 20 years. At the start of 2020, Kang estimated that the total useful life of the patent (from acquisition date) was 12 years. What amount should Kang record as amortization on the patent at the end of 2020?

Reference no: EM132960014

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