INTANGIBLE ASSETS 8. An entity is planning to sell the business to new interests. The cumulative net earnings for the past five years amounted to P16,500,000 including expropriation loss of P1,500,000. The normal rate of return is 20%. The fair value of net assets of the entity at current year-end was P10,000,000. What is the amount of goodwill if: Excess earnings are purchased for 5 years? Excess earnings are capitalized at 25%? Annual average earnings are capitalized at 25%? Excess earnings are discounted at 12% for 5 years? (The PV of an ordinary annuity of 1 for 5 years at 12% is 3.60) 9. On January 1, 2021, an entity reported patent cost of P1,920,000 and related accumulated amortization of P240,000. The patent was purchased on January 1, 2019 at which date the remaining legal life was 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, the entity paid P800,000, of which three-fourths was for a trademark and one-fourth was for the other entity's agreement not to compete for a 5-year period in the line of business covered by the trademark. The entity considered the life of the trademark indefinite. Moreover, the entity agreed to pay P50,000 to the other entity as consulting fee each year for 5 years payable every January 1. What is the total carrying amount of intangible assets on December 31, 2021?
INTANGIBLE ASSETS 8. An entity is planning to sell the business to new interests. The cumulative net earnings for the past five years amounted to P16,500,000 including expropriation loss of P1,500,000. The normal rate of return is 20%. The fair value of net assets of the entity at current year-end was P10,000,000. What is the amount of goodwill if: Excess earnings are purchased for 5 years? Excess earnings are capitalized at 25%? Annual average earnings are capitalized at 25%? Excess earnings are discounted at 12% for 5 years? (The PV of an ordinary annuity of 1 for 5 years at 12% is 3.60) 9. On January 1, 2021, an entity reported patent cost of P1,920,000 and related accumulated amortization of P240,000. The patent was purchased on January 1, 2019 at which date the remaining legal life was 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, the entity paid P800,000, of which three-fourths was for a trademark and one-fourth was for the other entity's agreement not to compete for a 5-year period in the line of business covered by the trademark. The entity considered the life of the trademark indefinite. Moreover, the entity agreed to pay P50,000 to the other entity as consulting fee each year for 5 years payable every January 1. What is the total carrying amount of intangible assets on December 31, 2021?
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 8PA: Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the...
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Transcribed Image Text:INTANGIBLE ASSETS
8. An entity is planning to sell the business to new interests. The cumulative net earnings for the past five
years amounted to P16,500,000 including expropriation loss of P1,500,000. The normal rate of return is
20%. The fair value of net assets of the entity at current year-end was P10,000,000.
What is the amount of goodwill if:
Excess earnings are purchased for 5 years?
Excess earnings are capitalized at 25%?
Annual average earnings are capitalized at 25%?
Excess earnings are discounted at 12% for 5 years? (The PV of an ordinary annuity of 1 for 5 years at
12% is 3.60)
9. On January 1, 2021, an entity reported patent cost of P1,920,000 and related accumulated amortization
of P240,000. The patent was purchased on January 1, 2019 at which date the remaining legal life was 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, the entity paid P800,000, of which three-fourths was for a trademark and one-fourth
was for the other entity's agreement not to compete for a 5-year period in the line of business covered by
the trademark. The entity considered the life of the trademark indefinite.
Moreover, the entity agreed to pay P50,000 to the other entity as consulting fee each year for 5 years
payable every January 1. What is the total carrying amount of intangible assets on December 31, 2021?
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