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Explain accounting treatment for the licence for the year

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Question - On 1 January 2015 Giga Bhd succeeded to acquire a licence from the local authority to operate a recreational club exclusively for women in the town of Ipoh. The licence is worth RM400,000 with a finite useful life of 5 years. Giga Bhd was the sole operator of the recreational club.

Two years later, due to the high demand for such club, the local authority had given licences to other operators. As at 31 December 2017, the present value of expected future cash flow and the selling price less cost to sell of the licence is RM150,000 and RM145,000 respectively.

Required - Explain the accounting treatment for the licence for the year ended 31 December 2015.

Reference no: EM133056080

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