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What is the total research and development expense

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Reference no: EM133020136

Question - The Las Vegas Inc. acquired several small companies at the end of 2016 and based on the acquisitions, reported the following intangibles in its 12/31/16 Balance Sheet:

Patent P600,000

Copyright 1,200,000

Trade name 1,050,000

Computer Software 300,000

Franchise 480,000

Goodwill 2,700,000

Additional information:

a. The patent which ad remaining legal life of 15 years, was purchased from FAC for P600,000. The company estimates that the patent will be useful in generating the company cash flows over a ten year period. The patent was carried on FAC's accounting records at a net book value of P800,000 when it sold the same to Las Vegas.

b. The company was able to generate approximately P1.5M in 2017 from distribution of the copyright protected materials. Moreover, the company estimates that P3.5M will be further generated from the copyrighted materials.

c. The company expects to use the trade name for the foreseeable future.

d. The accountant knows that the computer software is used in the company's 240 sales offices. The company has replaced the software I its 100 offices in 2017 and expects to replace the software in 80 more offices in 2018 and the remainder in 2019.

e. The franchise was purchased from JC Company. In addition, 5% of the revenue from the franchise must be paid to JC. Revenue from the franchise for 2017 was P2.5M. Las Vegas Inc. estimates that the useful life of the franchise to be 10 years and takes full year amortization in the year of purchase.

f. The company incurred research and development cost in 2017 as follows:

Materials 42,000

Equipment, 4 years useful life 100,000

Personnel 189,000

Indirect Costs 102,000

The company estimates that these costs will be recouped by December 31, 2020. the materials and equipment purchased have no alternative use.

Required - Using the above information, ascertain the following item:

1. What is the amortization expense on the Patent and Copyright combined in 2017?

2. How much is the total expense related to the franchise and computer software combined in 2017?

3. What is the total research and development expense in 2017?

4. What is the total intangibles as of 12/31/17?

Reference no: EM133020136

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