Suggested Solution:

Problem A. Fiji Company

Question No. 1
Cost of Patent P 480,000
Less amortization up to 12/31/2019 (480,000 x 5/10) 240,000
Carrying amount of patent, 12/31/2019 240,000

Question No. 2
Amortization on original patent (240,000/10) P 24,000
Amortization on related patent (280,000/10) 28,000
Total Amortization in 2020 52,000

Question No. 3
Original patent (240,000 x 7/10) p 168,000
Related Patent (280,000 x 7/10) 196,000
Carrying amount of patent, 12/31/2022 364,000

Question No. 4
Carrying amount of patent, 12/31/2022 P 364,000
Less Amortization (1/1/23 to 7/1/23)
Original (240,000/10 x 6/12) 12,000
Related (280,000/ 10 x 6/12) 14,000 (26,000)
Loss on obsolescence 338,000

Problem B. Athens Corp

Question No. 1
Cost of patent P 4,000,000
Less amortization in 2022 (4M/10) (400,000)
Carrying amount, 1/1/23 3,600,000
Divide by revised remaining useful life 5
Patent amortization for 2023 720,000

Question No. 2
Carrying amount, 1/1/23 P 3,600,000
Less amortization in 2023 ( 720,000)
Carrying amount, 12/31/23 2,880,000

Question No. 3
Cost of franchise P 960,000
Less amortization in 2023 (960,000 / 10) 96,000
Carrying amount of franchise, 12/31/23 864,000
Carrying amount of patent, 12/31/23 2,880,000
Carrying amount of intangible assets 3,774,000

Question No. 4
Patent amortization P 720,000
Franchise amortization 96,000
Periodic Franchise fee (5M x 5%) 250,000
R & D expense 866,000
Total Charged against income in 2023 1,932,000

Problem C. Marrakech Corp.

Question No. 1
April transaction P 1,477,500

Question No. 2 and 3

May transaction (18,000 x 50) 900,000
License (900,000 x 2/3) P 600,000
Trademark (900,000 x 1/3) 300,000
 Question No. 4
Cost
Patent P 1,477,500
Licenses 600,000
Trademark 300,000 P 2,377,500
Less amortization for 2023
Patent (1,477,500/6) x 9/12 184,687.50
Licenses (600,000/6) x 8/12 66,666,67
Trademark (300,000/6) x 8/12 33,333,33 284,687.50
Carrying amount, 12/31/23 2,092,812.5

Question No. 5
Organization Expense – January 2 transaction P 699,000
Advertising expense – January 15 transaction 45,000
R & D expense – Dec 31 transaction 750,000
Total 1,494,000

Problem D. Geneva Company

Question No. 1
Annual payment 720,000.00
Less: Executory costs 24,705.10
Minimum annual lease payment 695,294.90

Question No. 2
Present value of minimum lease payment - P695,294.90 x 6.32825 = P 4,400,000

Question No. 3

Min. Annual
Payment__ Interest expense Carrying Value
4,400,000.00
1/1/22 695,294.90 - 3,704,705.10
12/1/22 695,294.90 444,564.61 3,453,974.81
12/1/23 695,294.90 414,476.98 3,173,156.89

Question No. 4
P4,400,000/10 years = P 440,000

Question No. 5
Cost P 4,400,000
Accumulated depreciation 880,000
Net book value P 3,520,000

Problem E. The Palm Corporation

Question No. 1
Units
Raw materials, 1/1/23 35,000
Add Purchases 265,000
Raw materials available for use 300,000
Less raw materials, 12/31/23 (squeeze) 50,000
Goods placed in process 250,000
Less work-in-process, 12/31/23 25,000
Goods manufactured 225,000
Finished goods, 1/1/23 15,000
Total goods available for sale 240,000
Less finished goods, 12/31/23 40,000
Goods sold 200,000

Raw materials, 12/31/23 (50,000 units x P20.80) P1,040,000

 Question No. 2

R Raw materials [(10,000 units x P20.80) +

(15,000 units x P20.40)] P 514,000
Direct labor (25,000 units x 80% x P20a) 400,000
Factory overhead (25,000 units x 80% x P30b) 600,000
Work in process, 12/31/23 P1,514,000

Labor unit cost (P4,900,000/245,000* units) P20a

Overhead unit cost (P7,350,000/245,000* units) P30b

Equivalent production for labor and overhead

S Started, finished and sold [(200,000 units - 15,000
units) x 100%] 185,000
Started, finished and on hand (40,000 units x 100%) 40,000
Started, and in process (25,000 units x 80%) 20,000
Total 245,000

Question No. 3

Ra Raw materials [(30,000 units x P20.40)

+(10,000 units x P20)] P 812,000
Direct labor (40,000 units x P20a) 800,000
Factory overhead (40,000 units x P30b) 1,200,000
Finished goods inventory, 12/31/23 P2,812,000

Question No. 4

Raw materials, 1/1/23 P 720,200

Add purchases 5,232,800
Raw materials available for use 5,953,000
Less raw materials, 12/31/23 (see no. 1) 1,040,000
Direct materials used 4,913,000
Direct labor 4,900,000
Factory overhead 7,350,000
Total manufacturing cost 17,163,000
Add work-in-process, 1/1/23 -
Total cost placed in process 17,163,000
Less work-in-process, 12/31/23 (see no. 2) 1,514,000
Cost of goods manufactured 15,649,000
Add finished goods, 1/1/23 1,240,000
Total goods available for sale 16,889,000
Less finished goods, 12/31/23 (see no. 3) 2,812,000
Cost of goods sold P14,077,000