1.

The city government granted la Vendetta company rights to access and use the
airport land for 5 years. The rights can not bve assessed. La vendetta incurred
200T for preparing the airport land for operations. moreover, La Vendetta
constructed a 3M building on the airport land as requested by the government.
Determine (a) the amount of expense related to the transaction recognized by La
Vendetta on the period, and (b) the carrying value(s) of the asset(s) recognized by
LV at the end of the period.

2. SMC had these particular brands recognized on 2007:

Funchum (acquired) 2M
Leslie (internally developed) 3M
SMB (internally developed) 7M
12M
Legal and licensing fees, not included above, amounted to 300T.

Determine the amount to be recognized by SMC as (a) expense and (b) intangible
asset.

3. Nokia acquired a patent on 1/1/07 for 6M. The patent will be useful for the entire
legal life.
On 1/1/17, the patent had a recoverable value of 1M.
On 1/1/22, Nokia acquired another patent in order to extend the life of the original
patent. The cost of the patent is 5M.

Determine the amount to be recognized by Nokia as

a. Patent amortization on
(1) 2007,
(2) 2017,
(3) 2022 assuming that the life of the original patent was extended for 5 years and
(4) 2022 assuming that the life of the original patent was not extended.

b. the carrying value of Patent account on 12/31/22 assuming that

(1) The life of the original patent was extended for 5 years and
(2) The life of the original patent was not extended.

c. Impairment loss recognized by Nokia on 2017.

4. On 1/1/07, ODC sold a franchise to X for 20M for 20 years of selling ODC
products. The terms of the payment are:
5M downpayment
Balance for 3 years in equal annual installments, non-interest bearing note
with implied interest of 10% (PV of annuity of 3 periods for 10% factor
2.487)
First installment made on 12/31/07.
ODC required an annual fee of 4% gross sales to its franchisees. Gross sales for
2007 amounted to 10M.
Determine the amount of franchise revenue ODC will recognize in the year 2007
assuming that OD incurred 3487T in order to substantially perform all the services
required under the franchise contract and
a. payment of the note is reasonably assured
b. not reasonably assured.

5. Monica Co. had the ff. items on its Goodwill account as of 12/31/067:
Excess of Cost over FV on acquiring 100% X Co. interest 400T
Excess of Fv over Cost on acquiring 30% Y Co. interest (100T)
Managerial employee training costs, at FV,
credited to Retained Earnings. 200T
Impairment on X Company assets (50T)
450T
Give the entry to record the correction of the Goodwill account, if there are any
errors.

6. on 1/1/07, Zaido Co. acquired 75% ownership interest on Kokey Co. for 18M. on
that date, the identifiable net assets of Kokey has FV of 20M. Kokey is a cash
generating unit. On 12/31/07, Zaido determined that Kokey’s recoverable amount
is 12M. Zaido uses straight’line depreciation over 6 year life for kokey’s identifiable
assets with no residual value.

Determine the
a. goodwill arising from the business combination
b. impairment loss on the books of Zaido
c. carrying value of Kokey in Zaido’s accounts after recognition of impairment
loss