Reference no: EM132956367

Klaus, Inc. has the ff. information regarding their intangible assets. Klaus spent P2,600,000 of experimental and development costs in its laboratory to develop a patent which was granted on January 2, 2018. Legal fees and other costs associated with the registration of the patent totaled P544,000. Klaus estimates that the useful life of the patent will be 8 years.

Klaus purchased a trademark from Nikolai Co. for P1,280,000 on July 1, 2015. The trademark was successfully defended for a total cost of P326,400 which were paid on July 1, 2017. Klaus estimates that the useful life of the trademark will be 20 years from the date of acquisition.

Klaus signed an agreement on January 1, 2018, to operate as a franchise of Chooks to Go. For an initial franchise fee of P3,000,000. Of this amount, P600,000 was paid when the agreement was signed and the balance is payable in 4 annual installments of P600,000 each, beginning January 1, 2019. The downpayment is nonrefundable and no future services are required of the franchisor. The implicit rate for a loan of this type is 14%. The agreement provides that 5% of the revenues of the franchise must be paid to the franchisor annually. Klaus's revenues from the franchise for 2018 was P38,000,000. Klaus estimates that the useful life of the franchise is 10 years.

Problem 1. Carrying value of the franchise at December 31, 2018 is

a.None of the choices

b.2,250,000

c.2,700,000

d.2,113,405

Problem 2. Carrying value of the patent at December 31, 2018 is

a.3,144,000

b.476,000

c.544,000

d.3,076,000

Problem 3. Carrying value of the trademark at December 31, 2018 is

a. 1,372,800

b. 1,414,400

c. 1,088,000

d. 1,056,000