Reference no: EM133180992

Question 1 - The following accounts were taken in the ledger of Bergs Company as of December 31, 2022:

Amount set up by the Board of Directors as goodwill- P200,000

Losses in early years of company- P300,000

Trademarks- P780,000

Patents- P260,000

Goodwill from the acquisition of net assets of a company- P130,000

Organization costs- P100,000

In the statement of financial position of Bergs Company, the total intangible assets should be?

Question 2 - On January 1, 2021, Knowl Company classified non-current assets as held for sale that had a carrying amount of P2,500,000. On this date, the assets are expected to be sold for P2,300,000. Reasonable and expected disposal cost to be incurred for sale was expected at P100,000. By December 31, 2021, the asset had not been sold and management after considering its options decided to place back the non-current asset into operations. On that date, Knowl Company's managers estimated that the non-current asset was now expected to be selling at P1,800,000 with the disposal cost of P50,000, while depreciation for 2021 was computed at P500,000 if the non-current asset was not classified as held for sale. How much is the additional loss, related to the return of the asset to its original classification as non-current, shall be reported in the 2021 statement of comprehensive income?

Question 3 - You noted the following items relative to the company's intangibles assets of Knowie Corporation on December 31, 2020.

In January 2019, Knowie signed an agreement to operate as franchisee of Clear Copy Service, Inc., for an initial franchise of P680,000. Of this amount, P200,000 was paid when the agreement was signed and the balance was payable in four annual payment of P120,000 each beginning on January 1, 2020. The agreement provides that the down payment is not refundable, and no future services are required in the franchisor. The implicit rate for loan of this type is 14%. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Knowie's revenue from the franchise for 2020 was P8,000,000. Knowie estimates the useful life of the franchise to be ten years.

Knowie incurred P624,000 of experimental development costs in its laboratory to develop a patent which was granted on January 2, 2019, Legal fees and other costs associated with the registration of the patent totaled P131,200. Knowie estimates that the useful life of the patent will be eight years.

A trademark was purchased from Nowl Company for P320,000 on July 1, 2018. Expenditures for successful litigation in defense of the trademark totaling P80,000 were paid on July 1, 2020. Knowie estimates that the trademark's useful life will be indefinite.

What are the carrying amounts of the intangible assets (franchise, patents and trademarks, respectively) on December 31, 2020?