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In your audit of the books of generation of miracles

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In your audit of the books of GENERATION OF MIRACLES CORP. for the year ended December 31, 2014, you found the following items in connection with the company’s patent account. a) GOM Corp. had spent P360,000 during the year ended December 31,2013, for research and development cost. This amount was debited to its patent account. The company’s cost records discloses that it had spent a AUDITING PROBLEMS PREBOARD 6
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total of P424,500 for the research and development of its patents, of which P64,500 spent in 2013 had been debited to research and development expense. b) The patents were issued on July 1, 2013. In connection with the issuance of the patents, the company incurred legal expenses of P42,840, which were debited to Legal and Professional Fees Expense. c) On January 5, 2014, GOM Corp. paid a retainer of P45,000 for legal services in connection with a patent infringement suit brought against it. Deferred Costs was charged for the amount. d) In reply to your inquiry about the company’s liabilities as of December 31, 2014, you received a letter from the company’s legal counsel dated January 20, 2015, which indicated that a settlement of the patent infringement suit had been arranged. The plaintiff will drop the suit and release the company from all future liabilities in exchange for P60,000. Additional lawyer’s fees were incurred amounting to P3,780.
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  • Fall '17
  • Gutierrez
  • 1966, 1981, 1973, 1970, 1977, 1983

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