On January 2, 2016, Affable Co. incurred legal fees and other costs associated with registration of a patent in the amount of P109,200. The patent is being amortized over its legal life under the Intellectual Property Code of the Philippines. On January 1, 2022, Affable paid P90,000 legal fees for the litigation put up against the patent, which defense was unsuccessful. What total amount of expense should Affable report in its 2022 income statement related to the patent? O a. 95460 O b. 90000 O c. 5460 O d. 166440

On January 2, 2016, Affable Co. incurred legal fees and other costs associated with registration of a patent in the amount of P109,200. The patent is being amortized over its legal life under the Intellectual Property Code of the Philippines. On January 1, 2022, Affable paid P90,000 legal fees for the litigation put up against the patent, which defense was unsuccessful. What total amount of expense should Affable report in its 2022 income statement related to the patent? O a. 95460 O b. 90000 O c. 5460 O d. 166440

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1 In November 2019, Manly Ltd, a manufacturer of heating systems, was taken to court by one of its competitors, Heating Ltd, under the Competition and Consumer Act 2010(Cth). Heating alleged that Manly sought to enter into exclusive agreements with several retailers that they would only stock Manley’s products. While manly incurred $240000 in legal costs in defending the action, the case was settled out of court. The terms of the agreement on 20 February 2020 provided that Manly would pay Heating $$500,000 immediately, and an amount equal to 3% of profits over the next two years. For 2018/2019 the profit was estimated to be $660,000 and the year after $780,000. Advise Manly on the deductibility of this expenditure. Make sure you include the relevant sections of the legislation
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