Group 1:

Ananayo, Cherie Lyn

Escocio, Clariz Angelika
Ong, Jessica
Tacyo, Vergel
Wandagan, Midran

CHAPTER 31

Problem 31-7 (C)

Acquisition Cost (150,000 x 50) 7,500,000
Fair v alue of net assets acquired 6,800,000
Goodwill 700,000

Carrying amount of net assets 6,000,000

Excess fair v alue of PPE 800,000
Fair v alue of net assets 6,800,000

Problem 31-8 (C)

Accounts Receiv able 2,000,000
I nv entory 500,000
Equipment 500,000
Short-term payable - 2,000,000
Net assets at fair v alue 1,000,000

Acquisition cost 5,000,000

Net assets at fair v alue - 1,000,000
Goodwill 4,000,000

Problem 31-9 (C)

Acquisition Cost (200,000 x 30) 6,000,000
Fair v alue of net assets acquired - 5,400,000
Goodwill 600,000

Carrying amount of net assets 5,000,000

Excess fair v alue of identifiable assets 400,000
Fair v alue of net assets 5,400,000
Problem 31-10 (A)
Carrying amount of net assets 3,200,000
Underv aluation of PPE 750,000
Ov erv aluation of other assets - 500,000
Ov erv aluation of long-term debt 200,000
Fair v alue of net assets 3,650,000

Acquisition Cost 4,000,000

Fair v alue of net assets acquired - 3,650,000
Goodwill 350,000

Problem 31-11
1. D
2. C
3. D
4. D
5. C
6. B
7. D
8. A

Problem 31-12
1. D
2. D
3. C
4. C
5. D

Problem 31-13
1. C
2. B
3. B
4. D
5. A
6. D
7. A
8. B
9. D
10. A
Problem 31-14
1. A
2. C
3. D
4. B
5. A

CHAPTER 32

Problem 32-15 (C)

Cost 1/1/2015 6,000,000
Accumulated Depreciation (6,000,000/15x5)
2,000,000

Carrying amount - 1/1/2020 4,000,000

Amortization for 2020 (4,000,000/5) 800,000

Problem 32-16 (A)

Cost of competing patent 4,500,000
Remaining useful life 10 years
Amortization for 2020 (4,500,000/10) 450,000

Problem 32-17 (D)

Acquisition Cost - January 1, 2017 450,000
Amortization Cost (450,000/15x3) -90,000
Carrying Amount - January 1, 2020 360,000

Sale Price 750,000

Carrying amount 360,000
Gain on sale 390,000

Problem 32-18 (C)

Cost 1/1/2018 5,400,000
Amortization Cost (5,400,000/6x2) -1,800,000
Carrying Amount - January 1, 2020 3,600,000

Amortization for 2020 (3,600,000/20) 180,000

Problem 32-19 (A)
Design Costs 1,500,000
Legal fees of regestering trademark 150,000
Registration fee with patent office 50,000
Total Cost of trademark 1,700,000

Problem 32-20 (B)

Purchase price 1,000,000
Nonrefundable v alue added tax 50,000
Legal cost incurred to register new trademark 1,050,000

Cost of trademark 1,155,000

Problem 32-21
Question 1 (C)
Trademark 2,000,000
Value in use (120,000 * 8%) 1,500,000
I mpairement Loss 500,000

Question 2 (D)
Patent 6,000,000
Amortization for 2020 (6,000,000/5) 1,200,000
Carrying amount -12/31/2020 4,800,000
Value in use (1,000,000 x 3.31) 3,310,000
I mpairement Loss 1,490,000

Problem 32-22 (C)

Downpayment 2,000,000
PV of annual payment for 4 years 2,910,000
Cost of franchise 4,910,000
Problem 32-23 (B)
Original Lease 12 years
Extension 8 years
Total Life 20 years
Less: Years expired 2 years
Remaining Life 18 years

Life of improv ement 15 years

Leasehold I mprov ement 540,000

Less: Depreciation -36,000
Carrying Amount 504,000

Problem 32-24 (B)

Accumulated Depreciation - 12/31/2020
150,000
(1,200,000/8)

Problem 32-25 (D)

Trav el Costs of salaried employees 400,000
Training of local employees 1,200,000
Total start-up cost to be expensed 1,600,000

Problem 32-26
1. D
2. D
3. A
4. D
5. D

Problem 32-27
1. A
2. C
3. C
4. C
5. D
Problem 32-28
1. C
2. D
3. B
4. D
5. D

CHAPTER 33

Problem 33-1
Question 1 (A)
Cost of patent - legal and registration only 1,000,000

Question 2 (B)
Dev elopment cost after technological feasibility 5,000,000
Additional dev . cost up to full manufacturing stage 2,000,000
Dev elopment cost capitalized 7,000,000

Question 3 (A)
Amortization of patent (1,000,000/5) 200,000
Amortization of dev . cost 7,000,000/5) 1,400,000
Total Amortization for 2021 1,600,000

Problem 33-2 (A)

Salaries of engineers, consultants and technicians 400,000
Cost of dev eloping the duct and producing the test model
500,000
Additional cost for rev ising the ducting process 600,000
Cost of dev eloping the first model or prototype 100,000
R and D expense 1,600,000

Problem 33-3 (D)

Research and dev elopment serv ices performed by
another entity 150,000
Design, construction and testing of preproduction
prototype and model 200,000
Testing in search for new product or process
alternativ e 175,000
Total R and D expense 525,000
Problem 33-4 (A)
Depreciation of equipment 20,000
Equipment purchased for current projects 200,000
R and D salaries for current projects 400,000
Material and labor cost for prototype product 600,000
R and D expense 1,220,000

Problem 33-5 (B)

Depreciation 300,000
Salaries 700,000
I ndirect Cost Allocated 200,000
Materials 180,000
Total Research and dev . expense 1,380,000

Problem 33-6 (C)

Special equipment used solely for product Y 600,000
Labor and material cost 2,000,000
Cost of testing prototype 800,000
Total research and dev . Expense 3,400,000

Problem 33-7 (B)

Salaries of laboratory employees researching how
to build the new car 2,500,000
Design, testing and construction of a prototype 4,000,000
R and D expense 6,500,000

Problem 33-8 (C)

Laboratory research 200,000
Cost of testing prototype 50,000
Construction of reseach facility 400,000
R and D expense 650,000

Problem 33-9 (B)

Laboratory research 750,000
Design of tools, jigs,molds and dies 220,000
Depreciation of equipment 300,000
R and D performed by stone for metal 230,000
Total R and D expense 1,500,000
Problem 33-10 (A)
R and D equipment 450,000
Engineering Cost 1,200,000
Total R and D expense 1,650,000

Problem 33-11 (C)

Machine A - charged entirely to expense 1,000,000
Machine B - (1,000,000/10) 100,000
Total R and Dexpense 1,100,000

Problem 33-12
Question 1 (B)
Duplication of computer softw are and training materials
2,500,000
Packaging Product 900,000
Total I nv entory 3,400,000

Question 2 (B)
Completion od detail program design 1,300,000
Cost incurred for coding and testing 1,000,000
Total Costs charged as expense 2,300,000

Question 3 (C)
Other coding cost 2,400,000
Other testing cost 2,000,000
Cost of producing product 1,500,000
Total cost to be capitalized 5,900,000

Problem 33-13 (A)

Depreciation Expense (9,000,000/3) 3,000,000

Problem 33-14 (B)

Cost for the application dev elopment stage 4,000,000
Cost that was capitalized and amortized (8,000,000/4) 2,000,000
Cost of training employees 50,000
Total Expense 6,050,000
Problem 33-15 (D)
The 1,000,000 cost should be charged t computer
software on the premise that there is already a
technological feasibility. The 750,000 should be
classified as distribution cost

Problem 33-16 (C)

Capitalizable Cost 750,000

Problem 33-17
1. D
2. D
3. D
4. C
5. A
6. C
7. B
8. C

Problem 33-18
1. A
2. B
3. A
4. B
5. A
6. C
7. A
8. B