Cyclops Company has its own research department. However, the company purchases patents from time to time. The following is a summary of transactions involving patents now owned by the company.

• During 2014 and 2015, Cyclops spent a total of P459,000 in developing a new process that was patented (Patent A) on April 1, 2016; additional legal and other costs of P50,000 were incurred.

• A patent (Patent B) developed by Nanette Inventor, an inventor, was purchased for P187,500 on December 1, 2017, on which date it had an estimated useful life of 12 ½ years.

• During 2016, 2017 and 2018, research and development activities cost P510,000. No additional patents resulted from these activities.

• A patent infringement suit brought by the company against a competitor because of the manufacture of articles infringing on Patent B was successfully prosecuted at a cost of P42,600. A decision in the case was rendered in June 2018.

• On July 1, 2019, Patent C was purchased for P172,800. This patent had 16 years yet to run.

• During 2020, Cyclops experienced P180,000 on patent development. However, the company is still undecided as to how the patent, if approved by the Bureau of Patents, will generate probable future economic benefits.

Assume that the legal life of each patent is also its useful life.

Required:

1. Prepare the journal entries for the above transactions and related amortization from 2014 to 2020.
2. Determine the following:

1. Patent A’s carrying amount on December 31, 2020
2. Patent B’s carrying amount on December 31, 2020
3. Patent C’s carrying amount on December 31, 2020

Total amortization expense for the year ended December 31, 2020

these are all the information given.

Bombardier, after spending $250,000 on a feasibility study, has determined that its customers will be willing to pay more money for the C Series model if Bombardier invests in a manufacturing technology upgrade that can enhance the safety of the engine. Bombardier realizes that the delays in the C Series program are likely costing them potential sales of the C Series jets. The feasibility study allowed management to better understand the implementation costs of the new technology as well as the potential payoff. Thus, they see the opportunity to make a short-term investment in the engine technology that will affect the next eight years of production in order to improve their overall offering to their customers.

Because the C Series production facilities are already covered in original cost estimates, no additional costs for production facilities are required. However, the required new machinery will cost $2,100,000 and will be subject to capital cost allowance depreciation (Asset Class 8, 20% CCA Rate). When the C Series program expires after year eight, Bombardier executives figure there will be $396,361.73 in salvage on the equipment. Sales across the eight years of the C Series program are projected to be 19 units, 23 units, 30 units, 44 units, 55 units, 35 units, 37 units, and 40 units.

Bombardier expects that the price to their customers will start at an additional $125,000 with 3.5 per cent increases per year, as they wish to keep their prices competitive. Material costs of production are expected to be $67,500 per unit, growing at four per cent a year. Fixed costs per annum will amount to $670,000. The corporate tax rate Bombardier is subject to is 26.4 per cent.

Finally, Bombardier requires a maintained investment in working capital of $365,000 at the beginning of the project. This will stay at 14 per cent of sales at the end of each year, and reduces to 0 by the project's end; therefore, the investment in working capital is fully recovered by the project's end. As the company will be purchasing raw materials prior to production and sales delivery, they must create an investment in inventory as well as

maintaining some cash as a buffer against unforeseen expenses. If the firm has negative taxable income from the project in a given year, please assume that the firm has positive income from other projects, so that the loss can be written off (as a tax benefit) against this other project income in the same year.

Questions

1. What is the Internal Rate of Return on the project?

2. What is the Net Present Value of the project if the required rate of return (Weighted

   Average Cost of Capital) is equal to 3.90 per cent?

3. By how much would the Net Present Value of the project change if unit sales were 25

   per cent less than expected (round down toward zero the number of units; the WACC is still 3.90%)?

Bombardier, after spending $250,000 on a feasibility study, has determined that its customers will be willing to pay more money for the C Series model if Bombardier invests in a manufacturing technology upgrade that can enhance the safety of the engine. Bombardier realizes that the delays in the C Series program are likely costing them potential sales of the C Series jets. The feasibility study allowed management to better understand the implementation costs of the new technology as well as the potential payoff. Thus, they see the opportunity to make a short-term investment in the engine technology that will affect the next eight years of production in order to improve their overall offering to their customers. Because the C Series production facilities are already covered in original cost estimates, no additional costs for production facilities are required. However, the required new machinery will cost $2,100,000 and will be subject to capital cost allowance depreciation (Asset Class 8, 20% CCA Rate). When the C Series program expires after year eight, Bombardier executives figure there will be $396,361.73 in salvage on the equipment. Sales across the eight years of the C Series program are projected to be 19 units, 23 units, 30 units, 44 units, 55 units, 35 units, 37 units, and 40 units. Bombardier expects that the price to their customers will start at an additional $125,000 with 3.5 per cent increases per year, as they wish to keep their prices competitive. Material costs of production are expected to be $67,500 per unit, growing at four per cent a year. Fixed costs per annum will amount to $670,000. The corporate tax rate Bombardier is subject to is 26.4 per cent. Finally, Bombardier requires a maintained investment in working capital of $365,000 at the beginning of the project. This will stay at 14 per cent of sales at the end of each year, and reduces to 0 by the project's end; therefore, the investment in working capital is fully recovered by the project's end. As the company will be purchasing raw materials prior to production and sales delivery, they must create an investment in inventory as well as maintaining some cash as a buffer against unforeseen expenses. If the firm has negative taxable income from the project in a given year, please assume that the firm has positive income from other projects, so that the loss can be written off (as a tax benefit) against this other project income in the same year.

1. What is the Internal Rate of Return on the project?

2. What is the Net Present Value of the project if the required rate of return (Weighted Average Cost of Capital) is equal to 3.90 per cent?

3. By how much would the Net Present Value of the project change if unit sales were 25 per cent less than expected (round down toward zero the number of units; the WACC is still 3.90%)?

Mr. Bestall, CFO of the Best Finance Inc., was satisfied with its income statement report. He decided to have a meeting with the analysts following the Best Finance Inc. before filing its financial statements with the SEC. The following conversation was in the meeting. CFO: The year ended on September 30 should be our most profitable in history and as a consequence, the board of directors has just awarded the officers generous bonuses. Analysts: I thought profits were down this year in the industry, mainly because of the pandemic COVID 19. Your latest interim report showed losses too. CFO: Well, they were down, but ten days before closing the accounting period we closed a deal that will give us a substantial increase for the year. Analysts: Oh, what was it? CFO: Well, you remember a few years ago our former president bought stock in Jubilee Enterprises because he had an inorganic growth plan. For six years, we have not been able to sell this stock, which cost us $3,000,000 and has not paid any dividends at all. We sold this stock to Rich & Rich Inc. for $4,000,000. So we had a gain of $700,000 ($1,000,000 before tax) which increased our net income for the year to $4,000,000. Last year's net income was $3,700,000. As far as I know, we will be the only company in the industry to register an increase in net income this year. That should help the market value of the stock! Analysts: When do you expect to receive the $4,000,000 in cash? CFO: They give us a $4,000,000 zero-interest bearing note with payments of $400,000 per year for the next ten years. The first payment is due on September 30 next year. Rich & Rich Inc. is an excellent company. They are a little tight for cash because of their rapid growth. Analysts: Why is the note zero-interest bearing? CFO: Because that's what everybody agreed to. Since we don't have any interest-bearing debt, the funds invested in the note do not cost us anything and besides, we were not getting any dividends on the Jubilee Enterprises stock.

Do you agree with the way the CFO has accounted for the transaction?

Explain your reasoning.

can you explain in details how did we come up with this answer and how to answer similar

what is the economic concept behind this

NO.152 A pharmaceutical company was recently awarded a 20 year patent for a new medicine it has
developed. Which of the following results could be a consequence of this patent? (Select all that
apply.)
A. The high price of the medicine will result in insufficient demand.
B. The pharmaceutical company will charge higher prices for the drug.
C. The cost to produce the medicine will remain high after the patent expires.
D. Pharmaceutical companies will be incentivized to develop new medicines in the future.
E. The company will drive its competitors out of the pharmaceutical industry, limiting innovation.
Answer: B,D

from a business point of view ( not psychological ) :

a. Explain the meaning of values from a business point of view ( 100 words )

b. explain how values impact innovation and entrepreneurship from a business point of view (300 Words) ... u can use some of the following values as examples :

- ‘Universalism’ is a value type that gives priority to social justice and tolerance for all.

- Benevolence’ means promoting the welfare of other people.

- Tradition’ is formed from values that represent respect for traditions and customs.

- Stimulation’ is a group of values that reflect the preference for an exciting life.

- Hedonism’ is a value type which emphasizes a preference for pleasure and self-rewarding.

- . Strong value of ‘Power’ usually indicates a person who appreciates social status.

Oliban is an Omani company offers beauty products of the highest quality of natural frankincense based on scientific research to deliver the best results. It is one of a leading innovation company in GCC in health & wellness. It produces products from Omani frankincense oil branded as oliban which is best grade of its kind.

A.      Because of the Coronavirus disease (Covet-19) Oliban management decided to set a new strategy. Explain in your words in no less than 200 words, the strategic management process phases the Oliban’s strategic team should follow.

B.      If Oliban management decided to give a consultant agency to set their strategy, discuss in your words in no less than 200 words, the advantage and disadvantage of this action?

*As an employee with less than one year of experience in a firm, what actions would you pursue if you encountered unethical practices by a strategic leader?
*Select an organization, social group, or volunteer agency of which you are a member that you believe has an ethical culture. What factors caused this culture to be ethical? Are there any events that would cause the culture to become less ethical? If so, what are they?
*Do firms encounter ethical issues when they use internal corporate-venturing processes to produce and manage innovation? If so, what are these issues?
*Small firms often have innovative products. When is it appropriate for a large firm to buy a small firm for its product innovations and new product ideas?

Note On Lead User Research describes how the potential of alternative uses of research can be determined methodically. Lead Users are defined as consumer groups who lead with respect to cutting edge applications of important markets and technical trends. Stages of a Lead User study are discussed which include project planning, trends/needs identification, preliminary concept generation, and final concept generation.

Questions

What are the characteristics of Lead Users?

What are the three types of Lead Users?

What resource commitments are required for the level of innovation that will support the alternative market?

How can Stage II: Trends/Needs Identification be conducted in a quantitative and scientific fashion?

Why is ‘Testing the Concepts’ not a stage of the Lead User Study?