Reference no: EM133055148
Question - Misty Company acquired four patents at the beginning of 2022, as follows:
|
Acquisition
|
Cost
|
Useful life
|
Remaining legal life
|
|
Patent no. 1
|
P900,000
|
12 years
|
15 years
|
|
Patent no. 2
|
1,000,000
|
5 years
|
19 years
|
|
Patent no. 3
|
1,260,000
|
25 years
|
18 years
|
|
Patent no. 4
|
500,000
|
4 years
|
10 years
|
Patent no. 3 is believed to be uniquely useful as long as the entity retains the right to use it.
The entity became involved in two separate litigations involving Patent No. 2 and Patent no. 4.
The entity successfully defended the right to Patent no. 2 on June 30, 2022. Legal fees of P200,000 were incurred in this action. However, on October 1, 2022, the entity was not able to defend its rights to Patent no. 4 therefore, the outcome of this litigation was unsuccessful. Legal fees of P340,000 were incurred in this action.
Required -
1. How much is the total patent amortization to be recognized in 2022?
2. How much is the total expenses related to patent no. 2 in 2022?
3. How much is the total expenses related to patent no. 4 in 2022?
4. What is the total carrying value of the patents on December 31, 2022?