MODULE 7 INTANGIBLES

LEARNING OBJECTIVES:
1. Define an intangible asset.
2. State the initial measurement of intangible assets that are (a) externally acquired and (b)
internally generated.
3. State the subsequent measurement of intangible assets that (a) have finite useful life
and (b) indefinite useful life.

OVERVIEW
PAS 38 Intangible Assets outlines the accounting requirements for intangible assets, which are
non-monetary assets which are without physical substance and identifiable (either being
separable or arising from contractual or other legal rights). Intangible assets meeting the
relevant recognition criteria are initially measured at cost, subsequently measured at cost or
using the revaluation model, and amortized on a systematic basis over their useful lives (unless
the asset has an indefinite useful life, in which case it is not amortized).

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Objective
The objective of PAS 38 is to prescribe the accounting treatment for intangible assets that are
not dealt with specifically in another PFRS.

The Standard requires an entity to recognise an intangible asset if, and only if, certain criteria
are met. The Standard also specifies how to measure the carrying amount of intangible assets
and requires certain disclosures regarding intangible assets. [PAS 38.1]

Intangible asset: an identifiable non-monetary asset without physical substance. An asset is a

resource that is controlled by the entity as a result of past events (for example, purchase or self-
creation) and from which future economic benefits (inflows of cash or other assets) are
expected. [PAS 38.8]

Thus, the three critical attributes of an intangible asset are:

a. identifiability
b. control (power to obtain benefits from the asset)
c. future economic benefits (such as revenues or reduced future costs)

Essential elements of an intangible asset:

1. Identifiability - an intangible asset is identifiable when it: [PAS 38.12]
is separable (capable of being separated and sold, transferred, licensed,
rented, or exchanged, either individually or together with a related contract) or
arises from contractual or other legal rights, regardless of whether those rights are trans-
ferable or separable from the entity or from other rights and obligations.

2. Control – means the entity has the ability to benefit from the intangible asset or prevent
others from benefiting from it. Control normally arises from legal rights that are
enforceable in a court of law.
 3. Future economic benefits – the future economic benefits from an intangible asset may
include revenue from the sale of products or services, cost savings (e.g., reduction in
production coast rather than increase in revenues), or other benefits resulting from
entity’s use of asset.

Examples of intangible assets

o patented technology, computer software, databases and trade secrets
o trademarks, trade dress, newspaper mastheads, internet domains
o video and audio visual material (e.g. motion pictures, television programmes)
o customer lists
o mortgage servicing rights
o licensing, royalty and standstill agreements
o import quotas
o franchise agreements
o customer and supplier relationships (including customer lists)
o marketing rights

Intangibles can be acquired:

o by separate purchase
o as part of a business combination
o by a government grant
o by exchange of assets
o by self-creation (internal generation)

Recognition

Recognition criteria. PAS 38 requires an entity to recognize an intangible asset, whether

purchased or self-created (at cost) if, and only if: [PAS 38.21]
a. it is probable that the future economic benefits that are attributable to the asset will flow
to the entity; and
b. the cost of the asset can be measured reliably.

If recognition criteria not met. If an intangible item does not meet both the definition of and
the criteria for recognition as an intangible asset, PAS 38 requires the expenditure on this item
to be recognized as an expense when it is incurred. [PAS 38.68]

Initial measurement
Intangible assets are initially measured at cost. Cost depends on how the intangible asset is
acquired. Intangible assets may be acquired through:
a. Separate acquisition
b. Acquisition as part of business combination
c. Acquisition by way of government grant
d. Exchange of assets, or
e. Internal generation

Separate acquisition
Cost of a separately acquired intangible assets comprises:
a. “Purchase price, including import duties and non-refundable taxes, after deducting trade
discounts and rebates; and
b. Any directly attributable cost of preparing the asset for its intended use.” (PAS 38.27)
Example of directly attributable costs:
a. Cost of employee benefits arising directly from bringing the asset to its working condition
b. Professional fees arising directly from bringing the asset to its working condition.
c. Cost of testing whether the asset is functioning properly. (PAS 38.29)

Acquisition as part of business combination

The cost of intangible acquire in a business combination is it fair value at the acquisition date.

Acquisition by way of government grant

Intangible asset acquired by way of government grant (e.g., airport landing rights, licenses to
operate radio or television stations, import licenses or quotas or rights to access other restricted
resources) may be initially measured at either:
a. Fair value; or
b. Alternatively at nominal amount plus direct cost incurred in preparing the asset for its
intended use

Acquisition by exchange
Measurement of the intangible asset depends on whether the exchange has commercial
substance or not.
a. With commercial substance – an exchange has commercial substance if entity’s
subsequent cash flows are expected to change as a result of the exchange.
The intangible asset received is measured using the following order of priority:
1. Fair value of asset given up plus cash and cash equivalent transferred;
2. Fair value of asset received; or
3. Carrying amount of asset given up plus cash and cash equivalent transferred.
b. Exchange lacks commercial substance – the intangible asset received is measured at the
carrying amount of the asset given up plus cash and cash equivalent transferred.

Initial recognition: research and development costs

o Charge all research cost to expense. [PAS 38.54]
o Development costs are capitalized only after technical and commercial feasibility of the
asset for sale or use have been established. This means that the entity must intend and
be able to complete the intangible asset and either use it or sell it and be able to demon-
strate how the asset will generate future economic benefits. [PAS 38.57]

If an entity cannot distinguish the research phase of an internal project to create an intangible
asset from the development phase, the entity treats the expenditure for that project as if it were
incurred in the research phase only.

Initial recognition: in-process research and development acquired in a business combi-

nation
A research and development project acquired in a business combination is recognized as an
asset at cost, even if a component is research. Subsequent expenditure on that project is
accounted for as any other research and development cost (expensed except to the extent that
the expenditure satisfies the criteria in PAS 38 for recognizing such expenditure as an intangible
asset). [PAS 38.34]

Initial recognition: internally generated brands, mastheads, titles, lists

Brands, mastheads, publishing titles, customer lists and items similar in substance that are in-
ternally generated should not be recognized as assets. [PAS 38.63]
Initial recognition: computer software
o Purchased: capitalize
o Operating system for hardware: include in hardware cost
o Internally developed (whether for use or sale): charge to expense until technological fea-
sibility, probable future benefits, intent and ability to use or sell the software, resources
to complete the software, and ability to measure cost.
o Amortization: over useful life, based on pattern of benefits (straight-line is the default).

The following items must be charged to expense when incurred:

o internally generated goodwill
o start-up, pre-opening, and pre-operating costs
o training cost
o advertising and promotional cost, including mail order catalogues
o relocation costs

Measurement subsequent to acquisition: cost model and revaluation models allowed

An entity must choose either the cost model or the revaluation model for each class of intangible
asset.

Cost model. After initial recognition intangible assets should be carried at cost less accumu-
lated Amortization and impairment losses.

Revaluation model. Intangible assets may be carried at a revalued amount (based on fair
value) less any subsequent Amortization and impairment losses only if fair value can be deter-
mined by reference to an active market. [PAS 38.75] Such active markets are expected to be
uncommon for intangible assets. [PAS 38.78] Examples where they might exist:
o production quotas
o fishing licences
o taxi licences

Under the revaluation model, revaluation increases are recognized in other comprehensive
income and accumulated in the "revaluation surplus" within equity except to the extent that
they reverse a revaluation decrease previously recognized in profit and loss. If the revalued in-
tangible has a finite life and is, therefore, being amortized (see below) the revalued amount is
amortized. [PAS 38.85]

Classification of intangible assets based on useful life

Intangible assets are classified as:
1. Indefinite life: no foreseeable limit to the period over which the asset is expected to
generate net cash inflows for the entity.
2. Finite life: a limited period of benefit to the entity.

Measurement subsequent to acquisition: intangible assets with finite lives

The cost less residual value of an intangible asset with a finite useful life should be amortized on
a systematic basis over that life: [PAS 38.97]
o The Amortization method should reflect the pattern of benefits.
o If the pattern cannot be determined reliably, amortise by the straight-line method.
o The Amortization charge is recognized in profit or loss unless another PFRS requires
that it be included in the cost of another asset.
o The Amortization period should be reviewed at least annually. [PAS 38.104]
Measurement subsequent to acquisition: intangible assets with indefinite useful lives
o An intangible asset with an indefinite useful life should not be amortized. [PAS 38.107]
o Its useful life should be reviewed each reporting period to determine whether events and
circumstances continue to support an indefinite useful life assessment for that asset. If
they do not, the change in the useful life assessment from indefinite to finite
should be accounted for as a change in an accounting estimate. [PAS 38.109]
o The asset should also be assessed for impairment in accordance with PAS 36. [PAS
38.111]

Subsequent expenditure
o Due to the nature of intangible assets, subsequent expenditure will only rarely meet the
criteria for being recognized in the carrying amount of an asset. [PAS 38.20] Subsequent
expenditure on brands, mastheads, publishing titles, customer lists and similar items
must always be recognized in profit or loss as incurred. [PAS 38.63]

Amortization
o Amortization is “the systematic allocation of the depreciable amount of intangible asset
over it useful life.” (PAS 38.8)
o Intangible assets with finite useful life is amortized over the shorter of its useful life and
legal life.
o Intangible assets with indefinite life - An intangible asset with an indefinite useful life
should not be amortized.

Financial Statement Presentation

o Intangible assets accounted for under PAS 38 are presented separately from goodwill.
Such intangible assets are aggregated and presented as one line item under the
heading “intangible assets” or “other intangible assets” in the statement of financial
position. The breakdown of the line item is disclose in the notes.
o Goodwill is presented separately under a line item describe as “goodwill.”

Disclosure
For each class of intangible asset, disclose:
o useful life or Amortization rate
o Amortization method
o gross carrying amount
o accumulated Amortization and impairment losses
o line items in the income statement in which Amortization is included
o reconciliation of the carrying amount at the beginning and the end of the period showing:
o additions (business combinations separately)
o assets held for sale
o retirements and other disposals
o revaluations
o impairments
o reversals of impairments
o Amortization
o foreign exchange differences
o other changes
o basis for determining that an intangible has an indefinite life
o description and carrying amount of individually material intangible assets
 o certain special disclosures about intangible assets acquired by way of government
grants
o information about intangible assets whose title is restricted
o contractual commitments to acquire intangible assets

Additional disclosures are required about:

o intangible assets carried at revalued amounts
o the amount of research and development expenditure recognized as an expense in the
current period

MODULE 7 Post-test
PRACTICAL ACCOUNTING 1 – REVIEW
INTANGIBLES
PROF. U.C. VALLADOLID

Multiple Choice
Identify the choice that best completes the statement or answers the question.

1. An entity purchases a trademark and incurs the following costs in connection with the trademark:
One-time trademark purchase price 100,000 Nonrefundable VAT taxes 5,000 Training sales personnel on the use of
the new trademark 7,000 Research expenditures associated with the purchase of the new trademark 24,000 Legal
costs incurred to register the trademark 10,500 Salaries of the administrative personnel 12,000 Applying IFRS and
assuming that the trademark meets all of the applicable initial asset recognition criteria, the entity should recognize
an asset in the amount of
a. 100,000 b. 115,500 c. 146,500 d. 158,500

2. Richie Boy Company developed a new machine for manufacturing volleyballs. Because the machine is considered
very valuable, the entity had it patented. The following expenditures were incurred in developing and patenting the
machine:

Purchase of special equipment to be used solely for development of the new machine 2,250,000
Research salaries and fringe benefits for engineers and scientists 350,000
Cost of testing prototype 300,000
Legal cost of filing the patent 150,000
Fees paid to government patent office 60,000
Drawing required by patent office to be filed with patent application 30,000

1. What amount should be capitalized as the cost of the patent?

a. 150,000 b. 240,000 c. 210,000 d. 300,000

2. What amount of research and development should be expensed in the current year?
a. 2,700,000 b. 2, 550,000 c. 2,900,000 d. 2, 250,000

3. On July 1, 2023, ABCD purchased a patent from the inventor, who asked 1,100,000 for it. ABCD paid for the patent
as follows: cash, 400,000; issuance of 10,000 shares of its own ordinary shares, par 10 (market value, P20 per
share); and a note payable due at the end of three years, face amount, 500,000, noninterest-bearing. The current
interest rate for this type of financing is 12 percent. ABCD estimates the useful life of the patent to be ten years.

Carrying amount of patent as of December 31, 2023

a. P1,045,000 c. P860,310
b. P 955,900 d. P908,105
4. On January 1, 2023, ABCD signed an agreement to operate as franchisee of Clear Copy Service, Inc. for an initial
franchise fee of 680,000. Of this amount, 200,000 was paid when the agreement was signed and the balance was
payable in four annual payments of 120,000 each, beginning January 1, 2024. The agreement provides that the
down payment is not refundable and no future services are required of the franchisor. The implicit rate for loan of this
type is 14%. The agreement also provides the 5% of the revenue from the franchise must be paid to the franchisor
annually. ABCD’s revenue from the franchise for 2023 was 8,000,000. ABCD estimates the useful life of the
franchise to be ten years.

Carrying amount of franchise as of December 31, 2023

a.549,644 b.494,680 c. 538,733 d. 612,000

5. On December 31, year 3, Byte Co. had capitalized software costs of 600,000 with an economic life of four years.
Sales for year 4 were 10% of expected total sales of the software. At December 31, year 4, the software had a net
realizable value of 480,000. In its December 31, year 4 balance sheet, what amount should Byte report as net
capitalized cost of computer software?
a. 432,000 b. 450,000 c. 480,000 d. 540,000

6. Safehouse Company was granted a patent on a product on January 1, 2013 with 20-year useful life. To protect the
patent, the entity purchased on January 1, 2023 for 4,500,000 a patent on competing product which was originally
issued on January, 2016. Because of the unique plant, the entity does not feel the competing patent can be used in
producing a product.

What is the amortization of the competing patent for 2023?

a. 450,000 b. 225,000 c. 300,000 d. 0

7. On January 1, 2020 Ondoy Company, purchased a patent for P 9,140, 000. The patent is being amortized over the
remaining legal life of 15 years expiring on January 1, 2032. During 2023 the entity determined that the economic
benefits of the patent would not last longer than ten years from the date of acquisition.
What is the carrying amount of the patent on December 31, 2023?
a. 6,267,428.57 b. 1,828,000 c. 7,312,000 d. 9,140,000

8. Gray Company was granted a patent on January 1, 2020 and appropriately capitalized 450,000 of related costs. The
entity was amortizing the patent over the useful life of 15 years.
During 2023, the entity paid 150,000 in legal costs in successfully defending an attempted infringement of the patent.
After the legal action was completed, the entity sold the patent to the plaintiff for 750,000. The policy is to take no
amortization in the year of disposal

What amount should be reported as gain from sale of patent in 2023?

a.150,000 b.240,000 c.270,000 d.390,000
 9. On January 1, 2020, Lando Company purchased a patent for a new consumer product for 950, 000. At the time of
purchase, the patent was valid for 18 years. However the patent’s useful life was estimated to be only 9 years due to
the competitive nature of the product.

On December 31, 2023, the product was permanently withdrawn from sale under governmental order because of a
potential health hazard in the product.

What amount should be charged against income of 2023 if amortization is recorded at the end of each year?
a. 950,000 b. 316,667 c. 633,333 d. 950, 000

10. Northwest Company is planning to sell the business to new interests. The cumulative earnings for the past seven
years amounted to P7,450,000 including the expropriation gain of P 450,000. The fair value of net assets of
Northwest Company was P 9, 750, 000. The goodwill is determined by capitalizing average net earnings at 10%.

What is the amount to be paid for goodwill?

a. 250, 000 b. 7,450, 000 c. 1,000, 000 d. 350, 000

11. At the beginning of the current year LeBron Company purchased Currier Company for P9,000,000 cash. Currier
Company had total liabilities of P 3,560,000. LeBron’s Company assessment of the fair value it obtained when it
purchased Currier Company is as follows:

Cash 2,500,000
Inventory 780,000
In-process research and Development 1,250,000
Assembled workforce 2,000,000

What is the goodwill arising from the acquisition?

a. 910,000 b. 4,530,000 c. 8,030,000 d. 110,000

12. Bliss Company purchased the net assets of another entity for 6,000,000. On the date of the transaction, the acquiree
had 2,000,000 of liabilities. The assets of the acquiree at fair value were 3,000,000 for current assets and 6,000,000
for noncurrent assets.

How should the purchase be accounted for?

a. Retained earnings should be credited for P1,000,000.
b. Gain on bargain purchase should be credited for P1,000,000.
c. The current assets should be reported at P3,000,000 and the noncurrent assets at P5,000,000.
d. Negative goodwill should be credited for P1,000,000.
13. On January 1, 2021, Byword Company signed an eight-year lease for office space. The entity has the option to
renew the lease for an additional four-year period on or before January 1,2027.

During January 2023, two years after occupying the leased premises, the entity made general improvement to the
premises costing 3,600,000 and having an estimated useful life of ten years.

On December 31, 2023, the entity’s intention as to exercise of the renewal option is uncertain because this will
depend upon future office space requirement. A full year depreciation expense is taken for the current year.

What amount should be recorded as depreciation of leasehold improvement for the current year?
a. 300,000 b. 720,000 c. 450,000 d. 600,000

14. On January 1, 2021, Byword Company signed an eight-year lease for office space. The entity has an option to renew
the lease for an additional 8-year period on or before January 1, 2026.

During January 2023, the entity made substantial improvement to the warehouse. The cost of the improvement was
540,000 with an estimated useful life of 15 years.

On December 31, 2023, the entity intended to exercise the renewal option. The entity has taken a full year
depreciation on this leasehold improvement for 2023.

On December 31, 2023, what is the carrying amount of the leasehold improvement?
a. 486,000 b. 504,000 c. 501,429 d. 513,000

15. On January 1, 2021, Daredevil Company purchased a patent with a cost of 5,800,000 and useful life of 5 years. The
entity used straight line amortization. On December 31, 2023, the entity determined that impairment indicators are
present.

The fair value less cost of disposal of the patent is estimated to be 2,700,000. The value in use is estimated to be
2,825,000. The remaining useful life of the patent is estimated to be 2 years.

What should be reported as impairment loss for 2023?

a. 655,000 b. 780,000 c. 275,000 d. 0
16. At the beginning of the current year, Uptown Company acquired an intangible asset for P3,000,000. The intangible
asset has an estimated useful life of 10 years.

At the end of current year, the intangible asset was evaluated to determine whether it was impaired. On same date,
the fair value less cost of disposal of intangible asset is 2,000,000. The asset is expected to generate future cash
flows of 300,000 annually for the remaining 9 years.

The appropriate discount rate is 5%. The present value of an ordinary annuity of 1 at 5% for nine periods is 7.11.

What is the impairment loss to be recognized for the current year?

a. 700,000 b. 567,000 c. 867,000 d. 0

17. Bronze Company operates a production line which is treated as a cash generating unit. At year end, the carrying
amounts of the noncurrent assets of this cash generating unit are:

Intangible- goodwill 1, 100,000

Tangibles- plant and machinery 2, 200,000

At year end, the recoverable amount of the production line is estimated at 2, 700,000.

What are the revised carrying amounts of the intangible and tangible noncurrent asset, respectively?
a. 500,000 and 2, 200,000
b. 900,000 and 1,800,000
c. 1,100,000 and 1,600,000
d. 800,000 and 1,900,000

18. Pinkerton Corp. uses the cost model for intangible assets. On April 10, year 3, Pinkerton acquired assets for 100,000.
On December 31, year 3, it was determined that the recoverable amount for these intangible assets was 80,000. On
December 31, year 4, it was determined that the intangible assets had a recoverable amount of 84,000.

What is the impairment gain or loss recognized in year 3 and year 4 on the income statement?
Year 3 Year 4
a. 20,000 loss 16,000 loss
b. 20,000 loss 0
c. 20,000 loss 4,000 gain
d. 0 0

19. Cody Corp. incurred the following costs during year 4:

Design of tools, jigs, molds, and dies involving new technology 125,000 Modification of the formulation of a process
160,000 Troubleshooting in connection with breakdowns during commercial production 100,000 Adaptation of an
existing capability to a particular customer’s need as part of a continuing commercial activity 110,000 In its year 4
income statement, Cody should report research and development expense of
a. 125,000 b. 160,000 c. 235,000 d. 285,000
20. You are in the process of examining the intangible asset accounts of Jo Company and you obtained the following
information

A patent was purchased from Pizza Hot Company for P2,000,000 on January 1, 2022. Jo Company estimated the
remaining useful life of the patent to be 10 years at the date of purchase. The patent was carried on Pizza Hot
Company’s accounting records at a net carrying amount of P1,600,000 when Pizza Hot sold it to Jo Company.

During 2023, a franchise was purchased from Yellow Cob for P516,000. The terms of the payment are as follows:
P180,000 down payment on the date of the purchase, April 1, 2023 and P336,000 one year non-interest bearing note
due on April 1, 2024. Implicit interest in this transaction is 12%. In addition, 5% of revenue from the franchise must be
paid to Yellow Cob. Revenue from the franchise for 2023 wasP2,500,000. Jo estimated on the date of purchase that
the useful life of the machine was 10 years.

JO incurred the following expenditures relating to research and development activities in 2023:
Materials P42,000
Equipment 100,000
Indirect Cost 102,000
Jo estimates that these costs will be recouped by December 31, 2025 The materials and equipment purchased have
no alternative future uses.

During 2023, because of recent events in the field, Jo estimates that the remaining life of the patent purchased on
January 1, 2022 is only 5 years from January 1,2023. The company takes a full year’s amortization or depreciation
on assets acquired during the year.

1. The amortization of the patent for the year 2023 is

a. 200,000 b. 288,000 c. 333,000 d. 360,000

2. Total research and development expense to be shown in the 2023 statement of comprehensive income is
a. 244,000 b. 164,000 c. 144,000 d. 48,800

3. The carrying Value of the Franchise at December 31, 2023 is

a. 360,000 b. 370,000 c. 432,000 d. 444,000

4. The total amount that will be charged against revenue for 2023 related to the franchise is
a. 192,000 b. 188,000 c. 161,000 d. 200,000

5. The amortized cost of the Notes Payable on December 31, 2023 is

a. 300,000 b. 309,000 c. 327,000 d. 336,000
21. On December 31, 2022, Kaila Corporation acquired the following three intangible assets:

A trademark for P450,000. The trademark has 7 years remaining legal life. It is anticipated that the trademark
will be renewed in the future, indefinitely, without problem.

Goodwill for P2,250,000. The goodwill is associated with Kaila’s Manufacturing reporting unit.

A customer list for P330,000. By contract, Kaila has exclusive use of the list for 5 years. Because of market
conditions, it is expected that the list will have economic value for just 3 years.

On December 31, 2023, before any adjusting entries for the year were made, the following information was
assembled about each of the intangible assets:

a) Because of a decline in the economy, the trademark is now expected to generate cash flows of just P15,000 per
year. The useful life of trademark still extends beyond the foreseeable horizon.

b) The cash flows expected to be generated by the Kaila’s Manufacturing reporting unit is P375,000 per year for the
next 22 years. Carrying amounts and fair values of the assets and liabilities of the Kaila’s Manufacturing
reporting unit are as follows:
Carrying amount Fair values
Identifiable assets P4,050,000 P4,500,000
Goodwill 2,250,000 ?
Liabilities 2,700,000 2,700,000

c) The cash flows expected to be generated by the customer list are 180,000 in 2024 and 120,000 in 2025.

Based on the above and the result of your audit, determine the following: (Assume that the appropriate discount rate
for all items is 6%. Round off present value factors to 4 decimal places):

1. Total amortization for the year 2023

a. P110,000 c. P212,273
b. P174,285 d. P130,285

2. Impairment loss for the year 2023

a. P135,714 c. P200,000
b. P269,376 d. P 0

3. Carrying amount of Trademark as of December 31, 2023

a. P450,000 c. P385,715
b. P250,000 d. P180,624

4. Carrying amount of Goodwill as of December 31, 2023

a. P2,250,000 c. P2,147,727
b. P2,137,500 d. P2,193,750

5. Carrying amount of Customer list as of December 31, 2023

a. P330,000 c. P220,000
b. P264,000 d. P 0
22. A license is acquired July 1, 2020, for 450,000; while it has a legal life of 15 years, due to rapidly changing
environment, management estimates a useful life of only 5 years. Straight-line amortization will be used. At January
1, 2021, management estimated that the recoverable amount of the license is only 135,000. Amortization will be
taken over 3 years from that point.

On January 1, 2023, due to the change in general economic situations, the license now has a fair value of 540,000.
The entity adopted the revaluation model to measure the license starting January 1, 2023. The estimated remaining
useful life is now believed to be 5 years.

Based on the above and the result of your audit, determine the following:

1. How much is the loss on impairment on January 1, 2021?

a. P270,000 c. P225,000
b. P300,000 d. P 0

2. How much can be recognized as gain on impairment recovery in 2023?

a. P270,000 c. P495,000
b. P180,000 d. P315,000

3. How much will be recognized as revaluation surplus on January 1, 2023?

a. P270,000 c. P495,000
b. P180,000 d. P315,000