Reference no: EM132855805
Question - The accounting records of all Intangibles of All Men Company are just placed in one account. The following were recorded to the accounting on 2018 and 2019.
DATE PARTICULARS AMOUNT
2018
July 1 Franchise (Indefinite Terms) 1,260,000
October 1 Lease advance payment (2-year term, starting today) 840,000
December 31 Net loss, including incorporation fees, P 30,000; and related legal fees of organizing the business 480,000
2019
January 2 Purchased Patent (10- year life) 2,220,000
March 1 Cost of developing a recipe 2,250,000
April 1 Purchased Goodwill 8,352,000
July 1 Legal fees for successfully defending the patent purchased above 379,500
Other Notes
-On December 31, 2018, the management estimate that the annual net future cash flows from the franchise's continued use was at P 180,000. On December 31, 2019, this estimate was revised due to the decline of product demand to P 150,000 annually.
-On December 31, 2019, the estimated annual future cash flow of the patent's continued use was at P 337,822 for the remaining life.
-The prevailing market rate of interest as of December 31, 2018 and 2019 was consistent at 12%.
Required - What is the carrying value of the Franchise as of December 31, 2019?