On January1, 2021, an entity decided to declea of an existing patent from 10 years to 8 years. The patent was purchased on January 1, 2016 for P3,000,000. The estimated residual value is zero. The entity decided on January 1, 2021 to change the depreciation method from an accelerated method to the straight line method. On January, 2021, the cost of an equipment is P8,000,000 and the accumulated depreciation is P3,400,000. The remaining useful life of the equipment on January 1, 2021 is 10 years and the residual value of the patent is P200,000.What is the total charge against income for 2021 as a result of the accounting changes? * a. 940,000 O b. 960,000 O c. 627,500 O d. 647,500

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On January1, 2021, an entity decided to decrease the estimated useful life
of an existing patent from 10 years to 8 years. The patent was purchased on
January 1, 2016 for P3,000,000. The estimated residual value is zero. The
entity decided on January 1, 2021 to change the depreciation method from
an accelerated method to the straight line method. On January , 2021, the
cost of an equipment is P8,000,000 and the accumulated depreciation is
P3,400,000. The remaining useful life of the equipment on January 1, 2021
is 10 years and the residual value of the patent is P200,000.What is the
total charge against income for 2021 as a result of the accounting
changes? *
O a. 940,000
b. 960,000
c. 627,500
d. 647,500
Transcribed Image Text:On January1, 2021, an entity decided to decrease the estimated useful life of an existing patent from 10 years to 8 years. The patent was purchased on January 1, 2016 for P3,000,000. The estimated residual value is zero. The entity decided on January 1, 2021 to change the depreciation method from an accelerated method to the straight line method. On January , 2021, the cost of an equipment is P8,000,000 and the accumulated depreciation is P3,400,000. The remaining useful life of the equipment on January 1, 2021 is 10 years and the residual value of the patent is P200,000.What is the total charge against income for 2021 as a result of the accounting changes? * O a. 940,000 b. 960,000 c. 627,500 d. 647,500
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