Name: ______________________________________________ Date: ______________

Year & Section: ___________________________ Score: _____________

P3 QUIZ 1: INTANGIBLE ASSETS

General Instruction: NO erasures. Erasures are considered wrong and cheating. Wrong spelling is
wrong.

INSTRUCTIONS: Write REYAL if the statement is true and FAKI if the statement is false.
1. Intangible asset is a monetary asset with no physical substance.
2. No intangible asset shall be recognized for expenditures involving the maintenance of
customer relationships.
3. Future economic benefits from intangible assets may be in the form of generation of
revenue, cost savings or other benefits.
4. Costs incurred during research phase may be capitalized upon meeting all of
the capitalization criteria.
5. Amounts previously expensed during research phase shall be included in the cost of the
related intangible asset, if the project proves to be successful.
6. Effectively, revaluation model allows the revaluation of intangible assets that have not
previously been recognized as assets.
7. Similar to PPEs, the revenue method of depreciation cannot be applied to all of intangible
assets.
8. All research and development costs related to internally generated patent shall be expense
outright
9. Costs of successfully defending a patent shall be capitalized since it preserved the integrity
of the related patent.
10. Initial franchise fee is capitalized, while additional franchise fees are expensed outright.

INSTRUCTION: MULTIPLE CHOICE. Choose the best answer. Write you answer in CAPITAL
LETTER.
1. Characteristics of intangible asset include the following, except
A. Identifiable
B. Monetary asset
C. Provides economic benefits
D. Lacks physical substance
E. None of the above
2. An intangible asset is identifiable as
A. It is separable
B. Arises from contractual or other legal rights
C. Either a or b
D. Both a or b
3. Which of the following is considered as marketing-related intangible asset?
A. Trademark
B. Goodwill
C. Copyright
D. Patent
4. Which of the following is considered as technology-related intangible asset?
A. Patent
B. Customer list
C. License
D. Trademark
5. Given the following statements:
I. Intangible asset acquired as part of business combinations shall be initially measured at their
fair value.
II. Intangible asset acquired as part of basket purchase shall be initially measured at the
allocated purchase price based on the assets’ relative fair value
Name: ______________________________________________ Date: ______________
Year & Section: ___________________________ Score: _____________
Which of these statements is/are correct?
A. I only
B. II only
C. Both I and II
D. Neither I nor II
6. If an entity internally generated its patent, its initial cost shall be composed of which of the
following?
A. Legal and filing cost
B. Cost incurred during development phase
C. Cost incurred during research phase
D. All of the above are included in the initial cost of internally generated patent
7. The cost of franchise asset to be recognized by the franchisee shall be equal to
A. Initial franchise fee only
B. Additional franchise fee only
C. Both initial and additional franchise fees
D. Neither initial and additional franchise fees
8. Which of the following is not true regarding goodwill?
A. Goodwill arises solely from business combinations.
B. Expenditures made to promote the entity’s “goodwill” with the general public shall not be
recognized as goodwill but shall be expensed outright.
C. There is goodwill if the total consideration paid, including noncontrolling interest, is lower
than the net fair value of the acquired entity’s assets and liabilities.
D. None of the above
9. Generally, the following cost are expensed outright, except
A. expenditures on training activities
B. expenditures on advertising and promotional activities
C. pre-operating costs
D. expenditure for unused office supplies
10. Regarding the expenditures on goods and services, the following accounting procedures are
correct, except
A. Generally, expenditures on services are recognized as expenses when the services were
received.
B. Advances for services to be received in the future may be recognized as prepaid asset.
C. Expenditures on goods to be used solely for advertising and promotional purposes shall be
recognized as expense when these are actually consumed.
D. None of the above
11. During the year 2023, SALAYOG Company acquired a trademark for P1,700,000 plus purchase
taxes of P400,000. Half of these taxes is nonrefundable while the remaining half is refundable.
Legal costs of transferring the title over the trademark amounted to P300,000. Costs of
announcing to the public that the trademark has been acquired by the entity amounted to
P120,000. Required: From this information, determine the capitalizable cost of the trademark

A. P2,000,000 B. P2,200,000 C. P2,400,000 D. P2,600,000

ITEMS 12-14. January 1, 2023, AMMATA Company had the following patents:
Carrying Amount Remaining Useful Life Remaining Legal Life
Patent A P2,400,000 10 years 12 years
Patent B 3,000,000 12 years 8 years
Patent C 3,500,000 15 years 14 years
During the year 2023, the following events related to the patents have occurred:
July 1, 2023 Patent D was acquired for P1,800,000, with remaining useful life of 9 years and
remaining legal life of 11 years.
Name: ______________________________________________ Date: ______________
Year & Section: ___________________________ Score: _____________
Also, the following legal costs were incurred:
P150.000 for successfully defending Patent A against an infringement case.
P120,000 for unsuccessfully defending Patent B against an infringement case.
P160,000 for successfully prosecuting a patent infringing Patent C.
P125,000 for unsuccessfully prosecuting a patent infringing Patent D.
Required: From the given information, determine the following:
12. Total amount to be recognized in the Company's 2023 profit or loss.
A. P4,154,000 B. P4,541,000 C. P4,145,000 D. P4,514,000

13. Journal entries for July 1, 2023.

A. Patent D P1,800,000
Cash P1,800,000
B. Patent C P1,800,000
Cash P1,800,000
C. Patent A P1,800,000
Cash P1,800,000
D. Patent B P1,800,000
Cash P1,800,000
14. Total net carrying amount of the patents as of December 31, 2023.
A. P7,110,000 B. P7,000,000 C. P4,145,000 D. P8,110,000

ITEMS 15-18. AYCOCHO Company acquired some of the assets from REPUDAS Company, with
corresponding fair values through a basket purchase price of P4,000,000:
Carrying Amount Fair Value
Land P1,000,000 P2,000,000
Patent P1,200,000 P2,400,000
Trademark P300,000 P600,000

15. What is the allocated cost of land?

A. P1,920,000 B. P1,600,000 C. P4,000,000 D. P480,000

16. What is the allocated cost of patent?

A. P1,920,000 B. P1,600,000 C. P4,000,000 D. P480,000

17. What is the allocated cost of trademark?

A. P1,920,000 B. P1,600,000 C. P4,000,000 D. P480,000

18. What is the total allocated cost?

A. P1,920,000 B. P1,600,000 C. P4,000,000 D. P480,000

ITEMS 19-21. On January 1, 2023, SUGUITAN Company acquired a patent for P10,000,000. The
Company expects to use the patent for five years, after which it can sell the patent for P1,000,000.
Remaining legal life is 12 years. Under each of the following independent scenarios, determine the
periodic amount of amortization:
19. Calculate the amortization using Straight-line method.
20. Calculate the amortization using SYD method.
21. Calculate the amortization using Double-declining balance method.

ITEMS 22-23. Mr. MEJIA, as the franchisee, entered into a franchise contract by paying P3,000,000
cash on January 1, 2023. According to the contract, the franchise will expire when the entity
generated P30,000,000 revenue directly arising from the franchise. For the years 2023 and 2024, the
entity generated revenues of P7,200,000 and P5,400,000, respectively. Based on this information,

22. What is the amount of amortization based on its revenue for the year 2023?
A. P720,000 B. P3,600,000 C. P7,200,000 D. P360,000
Name: ______________________________________________ Date: ______________
Year & Section: ___________________________ Score: _____________
23. What is the amount of amortization based on its revenue for the year 2024?
A. P720,000 B. P3,600,000 C. P7,200,000 D. P360,000

ITEMS 24-26. Mr. OCAMPO decided to have an online presence and started the development of its
website. This website will contain the information about the entity and will also allow the customers
to place their orders. In connection with this, the following costs were incurred:
Costs of meeting with interested developers P1,000,000
Costs of evaluating the alternative developers 1,500,000
Costs of procuring domain name 3,000,000
Costs of developing codes 1,200,000
Costs of designing the site's appearance 1,600,000
Amounts paid to photographer and digital artist for
the contents to be displayed in the site 900,000
Training costs for employees who will monitor the website 400,000
Purchase cost of web server 4,000,000
Costs of updating the website's contents three months
after the website became live 800,000
Costs of stress testing the site 1,100,000
Cost of availing connectivity services of internet provider 600,000

24. What is the total cost shall be accounted in capitalized as Website asset?
A. P7,800,000 B. P4,000,000 C. P4,300,000 D. P0

25. What is the total cost shall be accounted in capitalized as PPE?

A. P7,800,000 B. P4,000,000 C. P4,300,000 D. P0

26. What is the total cost shall be accounted in expense outright?

A. P7,800,000 B. P4,000,000 C. P4,300,000 D. P0

27. Which of the following factors should not be considered in estimating the useful life of intangible
asset?
A. Legal, regulatory or contractual provision
B. Expected action by competitors or potential competitors
C. Residual value
D. Typical product life cycle of the asset
28. Which one of the following is not a component of the cost of internally generated intangible
asset?
A. Cost of materials and services used or consumed in generating the intangible asset.
B. Cost of employee benefits arising from the generation of the intangible asset.
C. Fees to register a legal right
D. Expenditure on training staff to operate the asset.
29. The following expenditures should be expensed when incurred, except
A. Advance payment for delivery of goods or rendering of services
B. Relocation costs
C. Advertising and promotion costs
D. Organization and other start-up costs
30. If a company constructs a laboratory building to be used as a research and development facility,
the cost of the laboratory building is matched against earnings as:
A. Research and development expense in the period of construction
B. Depreciation deducted as part of research and development cost
C. Depreciation or immediate writeoff depending on company policy
D. An expense at such time as productive research has been obtained from the facility
31. A research and development activity for which the cost should be expensed as incurred is
A. Engineering follow-through in early phase of commercial production
B. Design, construction, and testing of preproduction prototypes and models
C. Trouble shooting in connection with breakdowns during commercial production
Name: ______________________________________________ Date: ______________
Year & Section: ___________________________ Score: _____________
D. Periodic design changes to existing products
32. The following activities are normally conducted during the development phase, except
A. the design, construction and testing of pre-production or pre-use prototypes and models
B. the design, construction and operation of a pilot plant that is not of a scale economically
feasible for commercial production
C. the design, construction and testing of a chosen alternative for new or improved materials,
devices, products, processes, systems or services
D. none of the above
33. Which of the following is the correct accounting treatment for expenditures incurred during
research phase and development phase?
A. costs incurred during research phase shall be expensed outright, while costs incurred during
development phase may be capitalized.
B. costs incurred during research phase may be capitalized, while costs incurred during
development phase shall be expensed outright.
C. costs incurred during both the research and development phases shall be expensed outright.
D. costs incurred during both the research and development phases may be capitalized.
34. Capitalization criteria for internally generated intangible asset include all of the following, except
A. the technical feasibility of completing the intangible asset so that it will be available for use or
sale
B. entity's intention to complete the intangible asset and use or sell it
C. how the intangible asset will generate probable future economic benefits
D. its ability to measure reliably the expenditure attributable to the intangible asset during its
development
E. none of the above
35. Subsequent to initial recognition, intangible assets shall be measured using
A. cost model or fair value model
B. fair value model or revaluation model
C. cost model or revaluation model
D. any of the above depending on the entity's accounting policy