Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. san lorenzo company acquired patent right on july

San Lorenzo Company acquired patent right on July 1, 2018 for P2,000,000. The asset has...

70.2K

Verified Solution

Question

Accounting

San Lorenzo Company acquired patent right on July 1, 2018 for P2,000,000. The asset has a legal life of 15 years but due to the rapidly changing technology management estimates a useful life of only 5 years. On January 1, 2019, management is uncertain that the process can actually be made economically feasible, and decides to write down the patent to an estimated market value of P600,000. Amortization will be taken three years from this time. On January 1, 2020, after having perfected the related production process, the asset is now appraised at a sound value of P2,400,000. Furthermore, the estimated useful life is now believed to have extended by six more years. The company uses the straight-line method of amortization.

Instructions: Compute for the following:

Amortization expense for 2018.
Impairment loss to be recognized in 2019
Patent carrying value at December 31, 2019
Revaluation surplus recognized in 2020.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students