Reference no: EM132773379

Questions -

I. On January 20X4, entity purchased a patent from another entity for P750,000. The patent's carrying amount in the books of the other entity was P1,200,000. The estimated useful life of the patent is 10 years.

On January 1, 20X5, entity estimates that the remaining useful life of the patent is only five years. This revision in estimate was made due to significant changes in technology affecting the patent rights.

It is the entity's policy to take one-half year amortization in the year of acquisition and one-half year amortization in the year of disposal.

What are the journal entries in 20X5?

II. On January 1, 20X1, entity spent P196,000 to apply for and obtain a patent on a newly developed product. The patent had an estimated useful life of 10 years. At the beginning of 20X3, the entity spent P28,000 in successfully prosecuting an attempted infringement of the patent.

At the beginning of 20X6, the entity purchased for P60,000 a patent that was expected to prolong the life of its original patent by five years. On July 1, 20X9, a competitor obtained rights to a patent which made the entity's patent obsolete.

What are the journal entries to record the transactions relative to the patents from 20X1 to 20X9?

III. During 20X5, entity purchased a franchise from franchisor for P6,250,000 cash. In addition, the franchise agreement provides that the entity shall pay franchisor 5% of the revenue from the franchise. For the year 20X5, revenue from the franchise amounted to P10 million.

Entity estimates that the useful life of the franchise is 10 years. It is the entity's policy to take one-half year amortization in the year of acquisition and one-half year amortization in the year of disposal.

What are the journal entries for 20X5?