Reference no: EM132770135

Question - On January 1, 2021, Aim Company showed patent of P1,920,000 with related accumulated amortization of P240,000. The patent was purchased on January 1, 2019 at which date the legal life is 16 years. On January 1, 2021, the useful life of the patent was determined to be only 8 years from the date of acquisition.

On January 1, 2021, in connection with the purchase of a trademark from Cat Company, the parties entered into a non-competition agreement and a consulting contract. Aim Company paid Cat Company P800,000, of which three-fourths was for the trademark, and one-fourth was for Cat Company's agreement not to compete for a five-year period in the line of business covered by the trademark. Aim Company considers the life of the trademark to be indefinite. Moreover, Aim Company agreed to pay Cat Company P50,000 annually on January 1 of each year for 5 years.

What are the carrying amounts of intangible assets on January 1, 2021?

a. 1,880,000

b. 2,480,000

c. 2,280,000

d. 1,680,000