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    Problem 23-16

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    anneliban499
    1. The cost of intangible assets at initial recognition was P97,000, which was the total of the legal costs of P7,000 and payment for the taxi licenses of P90,000. 2. The amortization in 2021 was P9,700, which was calculated by taking the cost of the intangible assets of P97,000, dividing by the useful life of 5 years, and multiplying by the number of months in 2021 that the assets were in use, which was 6 months. 3. The carrying amount of intangible assets as of December 31, 2021 was P87,300, which was the initial cost of P97,000 less accumulated am

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    Problem 23-16

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    anneliban499
    251 views9 pages
    1. The cost of intangible assets at initial recognition was P97,000, which was the total of the legal costs of P7,000 and payment for the taxi licenses of P90,000. 2. The amortization in 2021 was P9,700, which was calculated by taking the cost of the intangible assets of P97,000, dividing by the useful life of 5 years, and multiplying by the number of months in 2021 that the assets were in use, which was 6 months. 3. The carrying amount of intangible assets as of December 31, 2021 was P87,300, which was the initial cost of P97,000 less accumulated am

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    INTANGIBLE ASSETS

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    1. The cost of intangible assets at initial recognition was P97,000, which was the total of the legal costs of P7,000 and payment for the taxi licenses of P90,000. 2. The amortization in 2021 was P9,700, which was calculated by taking the cost of the intangible assets of P97,000, dividing by the useful life of 5 years, and multiplying by the number of months in 2021 that the assets were in use, which was 6 months. 3. The carrying amount of intangible assets as of December 31, 2021 was P87,300, which was the initial cost of P97,000 less accumulated am

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    251 views9 pages

    Problem 23-16

    Uploaded by

    anneliban499
    1. The cost of intangible assets at initial recognition was P97,000, which was the total of the legal costs of P7,000 and payment for the taxi licenses of P90,000. 2. The amortization in 2021 was P9,700, which was calculated by taking the cost of the intangible assets of P97,000, dividing by the useful life of 5 years, and multiplying by the number of months in 2021 that the assets were in use, which was 6 months. 3. The carrying amount of intangible assets as of December 31, 2021 was P87,300, which was the initial cost of P97,000 less accumulated am

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 9

    CHAPTER 23:

    INTANGIBLE ASSETS
    ALBASTRO, MARIEL P.
    TEOMERA, REYNALENE L.
    Problem 23-16
    Julie Co. incurred the following expenditures in establishing its taxi business in a local city:

    Date Amount Additional Information


    May 1,2021 P1,500 General start-up costs
    June 30,2021 7,000 Legal costs directly attributable to the acquisition
    of the taxi licenses
    June 30,2021 100,000 Payment to the taxi licensing authority for the taxi
    licenses, including ₱10,000 refundable purchase
    taxes
    July 1,2021 100 Printing business cards of the drivers
    July 1,2021 20,000 Payment for an advertisement to be published
    every day for the next 12 months in a local daily
    newspaper
    At December 31, 2021, Julie Co. made the following assessments:
    • Economic life of the taxi license: five years from June 30, 2021 (the date of acquisition)
    • Residual value of the taxi license: nil
    • The entity expects to consume the taxi licenses’ future economic benefits evenly over
    five years from the date of acquisition
    • There is no indication that the taxi licenses might be impaired. The taxi drivers own
    their own vehicles which they operate under Julie Co.’s taxi licenses.

    Questions:
    Based on the above, compute for the following:
    1. Cost of the intangible assets at initial recognition
    a. P 7,000 c. P 90,000
    b. P 107,000 d. P 97,000
    2. Amortization in 2021
    a. P 7,000 c. P 9,700
    b. P 9,000 d. P 97,000

    3. Carrying amount of intangible assets as of December 31, 2021


    a. P 6,300 c. P 87,300
    b. P 96,300 d. P 81,000

    4. Total expenses in 2021 relating to establishment of taxi business


    a. P 11,200 c. P 32,300
    b. P 21,300 d. P 112,300

    5. Carrying amount of intangible assets as of December 31,2022


    a. P 49,000 c. P 63,000
    b. P 74,900 d. P 67,900
    Journal Entries:
    May 1, 2021
    • To recognize start-up costs incurred for the taxi operations
    Start-up Expense 1,500
    Cash 1,500

    June 30, 2021


    • To recognize legal costs directly attributable to the acquisition of the taxi licenses
    Intangible Assets 7,000
    Cash 7,000

    • To recognize the acquisition of the taxi licenses


    Intangible Assets 90,000
    Refundable Purchase Taxes 10,000
    Cash 100,000
    July 1, 2021

    • To recognize the cost of printing business cards for the taxi drivers as an expense
    Advertisement Expense 100
    Cash 100

    • To recognize advertisement cost paid on July 1 for the 12 months ending June 30
    2022
    Prepaid Advertisement 20,000
    Cash 20,000
    December 31, 2021

    • To recognize an expense for prepaid advertisement on July 1, 2021 for the 6 months
    ending Dec. 31, 2021
    Advertisement Expense 10,000
    Prepaid Advertisement 10,000

    • To recognize amortization of taxi licenses from the date when assets was ready for
    use (for 6 months period ended Dec. 31, 2021)
    Amortization Expense 10,000
    Intangible Assets- Acc. Amortization 10,000
    Solutions:

    1. Intangible Assets- June 30 (7,000 + 90,000) P 97,000- d

    2. Intangible Assets P 97,000


    Divided by Useful Life 5 years
    Multiplied by 6/12 months
    Amortization in 2021 P 9,700- c

    3. Intangible Assets- June 30 P 97,000


    Less: Amortization 9,700
    Intangible Assets- December 31, 2021 P 87,300- c
    Solutions:

    4. Expenses:
    May 1 P 1,500
    July 1 100
    December 31 (10,000 + 9,700) 19,700
    Total Expenses P 21,300- b

    5. Intangible Assets- December 31 2021 P 87,300


    Less: Amortization (97,000/5 years) 19,400
    Intangible Assets- December 31, 2022 P 67,900- d

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