Reference no: EM132576287

Question - UR Company purchased a customer database and a formula for a new fuel substitute for diesel fuel for a total of P98,000. UR Company uses the expected cash flow approach for estimating the fair value of these two intangibles. The appropriate interest rate is 5%. The potential future cash flows from the two intangibles, and their associated probabilities, are as follows: Customer Database: Outcome 1 - 20% probability of cash flows of P10,000 at the end of each year for 5 years. Outcome 2 - 30% probability of cash flows of P2,000 at the end of each year for 4 years. Outcome 3 - 50% probability of cash flows of P200 at the end of each year for 3 years. Formula: Outcome 1 - 10% probability of cash flows of P50,000 at the end of each year for 10 years. Outcome 2 - 30% probability of cash flows of P30,000 at the end of each year for 4 years. Outcome 3 - 60% probability of cash flows of P10,000 at the end of each year for 3 years. How much should be recognized as customer database?