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On January 2, 2007, RAYMOND INC. acquired copyrights to the original recordings of a famous singer. The agreement with the singer allows the company to record and rerecord the songs of the singer for a period of five years. During the initial six-month period of the agreement, the singer was very sick and consequently cannot record. The studio time that was blocked by the company had to be paid even during the period the singer could not sing. The following costs were incurred by the company: Legal cost of acquiring the copyrights Documentation expenses related to the copyright acquisition Operational loss (studio time lost, etc.) P10,000,000 1,000,000 2,000,000 1,000,000 Massive advertising campaign to launch the artist Raymond acquired the net assets of DNT INC. on June 30, 2007 in a business combination. The cost of acquisition is P2,000,000 more than the total fair market value of the company's identifiable net assets. Among the identifiable assets are the following intangibles: Estimated remaining life Book value P250,000 Fair market value P400,000 4 Trademark Customer lists 500,000 3 750,000 350,000 Franchise 200,000 5 31. How much should the copyright be initially recognized? a. 14,000,000 b. 12,000,000 c. 11,000,000 d. 10,000,000 32. What is the carrying value of the copyright as of December 31, 2007? a. 11,000,000 b. 9,900,000 c. 8,800,000 d. 7,700,000

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