In early January 2023, ABC Company applied for a patent and incurred legal costs of ₱49,000. In January 2024, ABC Company incurred ₱19,000 worth of legal fees in a successful defense of its patent. The company amortizes the patent over 7 years.Compute for the 2023 amortization.
Question
In early January 2023, ABC Company applied for a patent and incurred legal costs of ₱49,000. In January 2024, ABC Company incurred ₱19,000 worth of legal fees in a successful defense of its patent. The company amortizes the patent over 7 years.Compute for the 2023 amortization.
Solution
To compute for the 2023 amortization, follow these steps:
-
Determine the total cost of the patent. In this case, the initial cost is ₱49,000. The cost of defending the patent is not included in the 2023 amortization because it was incurred in 2024.
-
Determine the life of the patent. In this case, the patent is amortized over 7 years.
-
Divide the total cost of the patent by its life to find the annual amortization expense.
So, for 2023, the amortization is ₱49,000 / 7 = ₱7,000.
Similar Questions
ABC Company purchases a patent from XYZ Company for the price of ₱250,000 and incurs legal and consulting fees related to the purchase in the amounts of ₱60,000 and ₱40,000, respectively. The patents remaining life is 15 years, but because of the market competition, its useful life is estimated to be only 10 years.What is the total acquisition cost of the patent?
ABC Company purchases a copyright for ₱120,000 and incurs legal fees of ₱15,000 related to purchase. The estimated economic life of the copyright is 36 years. What is the amount of annual amortization?
ABC Corporation pays a franchise fee of ₱25,000,000 to enable to sell Good’s product for the next 20 years. In addition, it is required to pay an annual fee of ₱100,000. What is the amount of annual amortization?
ABC Company purchased a machine for ₱1,260,000 that was placed in service at year-end. The entity incurred additional cost for this machine:Shipping30,000Installation40,000Testing50,000Compute the amount to be reported as machinery.
On January 1, 2024, ABC Company purchased natural resources for ₱12,000,000, with a residual value of ₱1,500,000. The company expects the resources to produce 1,200,000 units of product.Compute the depletion expense for the month of January if ABC Company mined and sold 20,000 units.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.