CASE 1

10. Purchase of a franchise 1,250,000

13. Goodwill acquired in the purchase of a business 540,000
15. Cost of purchasing a patent from an inventor 500,000
16. Legal costs incurred in securing a patent 70,000
19. Cost of purchasing a copyright 900,000
23. Cost of purchasing a trademark 490,000
TOTAL 3,750,000
CASE 2 - SECRET LOVE
INTANGIBLE EXPENSE
a. Quality control during commercial production including routine testing products 1,150,000
b. Laboratory research aimed at discovery of new knowledge 1,350,000
c. Engineering follow-through in an early phase of commercial production 300,000
d. Adaption of existing capability to a particular requirement or customers need as part of continuing commercial
275,000
activity
e. Trouble shooting in connection with breakdowns during commercial production 575,000
f. Searching for applications of new research findings 375,000
g. Cost of equipment acquired that will have alternative use in the future research and development projects over
3,500,000
the next 5 years 700,000
h. Materials consumed in research and development projects 737,500
i. Consulting fees paid to outsiders for research and development projects 1,250,000
j. Personnel costs of persons involved in research and development projects 1,600,000
k. Indirect cost reasonably allocable to research and development projects 625,000
l. Materials purchased for future research and development 425,000
m. Testing for evaluation of new product 1,500,000
n. Design, construction, and testing of preproduction prototypes and models 1,087,500
o. Routine, ongoing efforts to refine, enrich or otherwise improve upon the qualities of an existing product 937,500
p. Radical modification to the formulation of a chemical product 543,750
q. Research and development cost reimbursable under a contract to perform research and development for Mucho
1,312,500
Corp.
TOTAL 937,500 9,768,750
CASE 3 - 7 YEARS Corp.

Legal fees to obtain patent 429,000

Patent application and licensing fees 63,500
Total 492,500

Shares 6,000 Shares 6,000

FV 50 FV 50
Total cost 300,000 Total cost 300,000
Ratio of license 2/3 Ratio of license 1/3
Cost of license 200,000 Cost of trademark 100,000

Patent License Trademark

COST 492,500 200,000 100,000
Amortization
(492,500 / 6 ) x 9/12 (61,563)
(200,000 / 6) x 8/12 (22,222)
(100,000 / 6) x 8/12 (11,111)
CV 430,938 177,778 88,889

Legal fees 150,000

Share cert cost 83,000
Phamplets and candy 15,000
Salaries 1,750,000
TOTAL 1,998,000
CASE 4 - LOVE YOURSELF CO.

Patent cost 2014 4,000,000

Amortization (4M/ 10) 400,000
CV 12/31/14 3,600,000
Revised lfe 5
Amortization 2015 720,000

CV 12/31/14 3,600,000
Amortization 2015 720,000
CV 12/31/15 2,880,000

Franchise 960,000
Amortization (960,000 / 10) 96,000
CV 12/31/15 864,000

CV Franchise 864,000
CV Patent 2,880,000
CV of intangibles 12/31/15 3,744,000
CASE 5 - STITCHES Company

Patent (200,000 /10) 20,000

Computer software (100,000 x 60/120) = 50,000** 50,000
100,000 / 3 = 33,333
** which ever is higher
Total amortization 70,000

Copyright Tradename CGU TOTAL

Recoverable amount
(8,000 / 5%) 160,000 160,000
(15,000 / 5%) 300,000 300,000
(200,000 x 14.093945) 2,818,789 2,818,789
-
Carrying values (400,000) (350,000) (3,000,000) (3,750,000)
Impairment loss (240,000) (50,000) (181,211) (471,211)

Goodwill before impairment 900,000

Impairment of CGU (181,211)
CV after impairment 718,789

Patent 180,000
Copyright 160,000
Trademark 300,000
Computer software 50,000
TOTAL CV of other intangibles 690,000
CASE 6 - ONE CALL AWAY

Development costs on web site are recognized as intangible asset under the development phase of Research and Development (i.e.,
established technical feasibility etc.). The web site must generate probable future economic benefits, i.e., the web site is capable of
generating revenues, including direct revenues from enabling orders to be placed. If the website is developed for the sole purpose of
promoting and advertising its own products and services, all expenditure on developing such a web site shall be recognized as an expense
when incurred.

The Planning stage is similar in nature to the research phase in PAS 38.54-.56. Expenditure incurred in this stage shall be recognized as an
expense when it is incurred.

When accounting for expenditure on professional services for taking digital photographs of an entity's own products and for enhancing
their display, expenditure shall be recognized as an expense as the professional services are received during the process, not when the
digital photographs are displayed on the web site. Expenditure incurred on developing content that advertises and promotes an entity's own
products and services (eg digital photographs of products) is an advertising and promotional activity, and consequently recognized as an
expense when incurred despite that is incurred during the content development stage.

Total P/L Capitalized

Research Stage 1 1,500,000 1,500,000
Development Stage 2 2,500,000 500,000 2,000,000
Stage 3 1,500,000 1,500,000
Stage 4 3,500,000 500,000 3,000,000
Operation Stage 5 1,500,000 1,500,000
10,500,000 4,000,000 6,500,000
CASE 7 - DISCLOSURE

Average annual earnings for the past 5 years 6,280,000

Expected annual increase in wages not to be recovered by
(400,000)
increase revenues
Increase in annual depreciation on the current fair value of
(120,000)
assets
Average annual cost of goods sold for the past 5 years (2,660,000)
Annual amortization of tangible assets with finite lives not
(100,000)
previously recorded
Average annual operating expenses for the past 5 years (1,800,000)
Average earnings 1,200,000

CV of net assets 5,700,000

Revaluation of weighted average inventory to FV 900,000
Increase in allowance for bad debts (100,000)
Revaluation of PPE to fair value 1,200,000
Fair value of patent 1,500,000
Revaluation of bonds payable due to decline in interest 600,000
Unfunded projected benefits obligation of the pension plan (1,400,000)
FV of net assets acquired 8,400,000
Average return 10% 840,000
Excess earnings 360,000
PV factor 3.790787
Goodwill 1,364,683
COMPREHENSIVE - JEALOUS Company

Patents 102,000
Goodwill 24,000
Licensing agreement 1 50,000
Licensing agreement 2 59,000
Total before adjustments 235,000
Add (less): Adjustments
1 (34,000)
2 (3,400)
3 1000
4 (1,250)
5 (29,250)
6 (5,500)
7 (24,000)
Adjsuted intangiibles 138,600

(1) Machinery 34,000

Patents 34,000
To transfer cost of improving
machinery to the fixed asset account.

(2) Cost of Goods Sold 3,400

Accumulated Amortization: Patents 3,400
To record 2015 patent amortization
(1/20 x P68,000).

(3) Licensing Agreement No. 2 1,000

Unearned Revenue 1,000
To classify revenue received in advance
on licensing agreement as unearned
revenue.

(4) Prior Period Adjustment – Licensing Agreement

No. 1 1,250
 Licensing Agreement No. 1 1,250
To take up 2014 amortization (40 year
life). (Note 1)

Note 1: Under the revised PAS 38 made

effective January 1, 2014, intangible assets with
indefinite useful lives need not be amortized but
periodically assessed for possible impairment.
This problem may also be solved by
disregarding the 40-year amortization period for
Licensing Agreement #1. The flood that
rendered Licensing Agreement #1 worthless in
January 2016 should be fully disclosed in the
December 31, 2015 statements.

(5) Prior Period Adjustment – Licensing Agreement

No. 1 29,250
Licensing Agreement No. 1 29,250
To write off the permanent 60%
reduction in the expected revenue-
producing value of licensing agreement
no. 1 caused by the December 2014
explosion (60% x P48,750).

(6) Cost of Goods Sold 5,500

Accumulated Amortization: Licensing
Agreements 5,500
To record 2015 amortization of
licensing agreement no. 1 [(P50,000 –
P1,250 – P29,250)  39] and no. 2
(P50,000  10).

(7) Selling and General Expenses 8,000

Start-up Expenses 16,000
Goodwill 24,000
To transfer items improperly charged to
Goodwill.

(8) Start-up Expenses 29,000

Organization Costs 29,000
 To expense other organization costs.

(9) Equipment 8,500

Accounts Receivable – Lessor 2,500
Leasehold Improvements 11,000
To charge the Equipment account with
movable equipment and to record a
receivable from the landlord for the real
estate taxes erroneously paid by Lee.

(10) Cost of Goods Sold 1,500

Prior Period Adjustment – Amortization of
Leasehold Improvements 1,500
Accumulated Amortization: Leasehold
Improvements 3,000
To record 2014 and 2015 amortization
of leasehold improvements based on
10-year life of lease (2 x 10% x
P15,000).