Reference no: EM132934882
Questions -
Q1) Clique Corp. owns a hotel resort, which includes a casino, housed in a separate building that is part of the premises of the entire hotel resort. Its patrons would be largely limited to tourists and non-resident visitors only.
The owner operates the hotel and other facilities on the hotel resort, with the exception of the casino, which can be sold or leased out under an operating lease. The casino will be leased to an independent operator. Clique Corp. has no further involvement in the casino. The casino operator will not be prepared to operate it without the existence of the hotel and other facilities.
On December 31, 2020, the following are relevant information for the purpose of measuring the above assets:
Hotel: 200,000,000
Casino: 50,000,000
Other facilities: 150,000,000
What amount of "Investment Property" shall Clique Corp. report on December 31, 2020?
a. P50,000,000
b. None
c. P250,000,000
d. P400,000,000
Q2) The following are intangible assets of Clique Company:
COPYRIGHT: On July 1, 2021, Clique Company purchased copyright for P800,000, having an estimated useful life of 16 years. On November 1, 2021, BTS paid P120,000 for legal fees in a successful defense of the copyright.
PATENT: On July 1, 2021, Clique Company purchased a patent from the investor, who asked P2,200,000 for it. Clique paid for the patent as follows: Cash of P600,000; issuance of 15,000 shares of its own ordinary shares with a par value of P20 and market value of P60 per share; non-interest-bearing note payable due at the end of three years, P500,000. The prevailing rate of interest for this type of financing is 12%. Clique estimates the useful life of the patent to be 8 years.
TRADEMARK: Clique purchased for P1,200,000, a trademark for a very successful vitamin it markets under the name Rain. The trademark is determined to have an indefinite life. A competitor recently introduced a new product that is in direct competition with Rain product so the need for impairment testing arises. Data gathered suggests that the trademark still has an indefinite life, but the cash flows expected to be generated by the trademark have been reduced to either P40,000 per year (with 50% probability), or to P80,000 per year (with 50% probability). The appropriate risk-free rate is 8% and the risk-adjusted rate is 10%.
How much is the total amortization expense for 2021?
a. P169,993
b. P165,993
c. P281,986
d. P140,993
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