41.

On January 1, 2010, Light Company bought a trademark for P400,000, having an estimated
remaining useful life of 16 years. After 16 years, revenues expected from this intangible asset
will be zero. In January 2014, Light paid P60,000 for legal fees in a successful defense of the
trademark. What amount of expense should Light Company recognize and charge against
income during 2014?
Answer: 85,000

42. Light Corporation uses different kinds of machine in its manufacturing process. It constructs
some of these machines itself and acquires others from the manufacturers. The following
Information relates to a machine that it has recorded in 2018.
Machine A (purchased)
Cash paid for equipment P250,000
Cost of transporting machine- 9,000
insurance and transport
Labor cost of installation by 15,00
expert fitter
Labor cost of testing 12,000
equipment
Insurance cost for 2018 4,500
Cost of training for personnel 7,500
who will use the machine
Cost of safety rails and 18,000
platforms surrounding
machine
Cost of water devices to keep 24,000
machine cool
Cost of adjustments to 22.500
machine during 2018 to make
it operate more efficiently

What is the cost of machine A?

ANSWER: 350,500

43. The following expenditures relating to the plant building were made by Light Company
during the year ended December 31, 2014:
Replacement of the old P 296,000
shingle roof with a fireproof
tile roof
Repainted the plant building 20,000
 Major investment to the 70,000
electrical wiring system

How much should be capitalized in 2014?

Answer: 366,000

44. On January 1, 2014, Light Company purchased a machine for P504,000 that was placed in
service on March 1, 2014. Additional costs incurred to bring the asset to its location and prepare
for its intended used were: shipping, P4,000 and installation and testing cost, P6,000. The
estimated useful life of the asset was 10 years and has an estimated salvage value of P34,000.
What amount of depreciation should be recognized for the year ended December 31, 2014?
Answer: 40,000

45. COPY-
Light Corporation uses different kinds of machines in its manufacturing process. It
constructs some of these machines itself and acquires others from the manufacturers. The
following information relates to a machine that it has recorded in 2018.
Machine B (self-constructed)
Cost of materials to construct P210,000
machine
Labor cost to construct 129,000
machine
Allocated overhead cost- 66,000
electricity, factory space, etc.
Allocated interest cost of 30,000
financing machine
Cost of installation 36,000
Profit saved by self- 45,000
construction
Safety inspection cost prior to 12,000
use

What is the cost of machine B?

Answer: 483,000
46. Light Company purchased a patent on January 1, 2011 for P428,000. The patent was being
amortized over its remaining legal life of 15 years expiring on January 1, 2023. Early 2014,
Light determined that the economic benefits of the patent would not last longer than 10 years
from the date of acquisition. What amount should be reported on the statement of financial
position as patent, net of accumulated amortization at December 31, 2014?
Answer: 293,760

47. On January 1, 2014, the Accumulated Depreciation – Machinery account of a particular

company shoed a balance of P370,000. At the end of 2014, after the adjusting entries were
posted, it shoed a balance of P395,000. During 2014, one of the machines which cost P125,000
was sold for P60,500 cash. This resulted in a loss of P4,000. Assuming that no other assets were
disposed of during the year, how much was depreciation expense for 2014?
Answer: 85,500

48. Light Company acquired a machine on January 1, 2016, at a cost of P120,000. It was
expected to have a useful economic life of 10 years. Light uses the straight-line method in
depreciating its machinery and equipment and reports in a calendar year basis. On December 31,
2018, the machine was appraised as having a gross replacement cost of P150,000. Light applies
the revaluation modelin the valuating this class of property, plant, and equipment after its initial
recognition.
How much should be credited to revaluation surplus on December 31, 2018?
Answer: 21,000

49. Light Company spent P288,000 in developing a new product with a patent being granted on
January 2, 2012. Due to the competitive nature of the product, the patent was estimated to have a
useful life of ten years. Cost of licensing and registering was P36,000. On July 1, 2014, a
competitor obtained rights to a patent, which made Light’s patent obsolete. How much is the loss
from patent obsolescence?
Answer: 27,000

50. Light Company exchanged a delivery van and P50,000 cash for a newer can owned by Dark
Corporation. The following data relate to the values of the vans on the date of exchange:
Carrying Value Fair Value
Light P300,000 P450,000
Dark 400,000 500,000
Immediately after the exchange, Light Company determined that the cash flows of the can
received differ from the cash flows of the van transferred. What is the cost of the new asset
acquired as basis for recording in the books of Light Company?
Answer: 500,000