How much is the carrying amount of the asset

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Reference no: EM132056101

In 2017 Lachie Ltd decided to develop a surfboard out of a new type of damage resistant plastic. In 2017 $510,000 was spent on research and aimed at understanding the properties of this new product, which if utilised should lead to signigificant future economic benefits.

In 2018 Lachie Ltd developed a prototype of its surfboard, which it had tested by several local surfers. Costs involved were $780,000 and orders were received from several local retailers. In anticipating demand for the new sufboard, Lachie spent $25,000 on legal costs to register its patent for the new design.

In 2019 Lachie Ltd undertook an international advertising campaign at a cost of $1m. Within the next few months orders were received for $40m for the new surfboard. As a result their accountant calculated that the present value of the new surfboard was $200m, which Lachie Ltd wanted to reflect in the company's balance sheet. A major competitor made a legally binding offer of $150m to purchase the patent for the new surfboard.

Describe how to account for the above transaction and events in accordance with AASB138 Intangibles and AASB13 Fair value measurement:

1. How much is the carrying amount of the asset, if any in 2019?

2. Can the asset if any, be revalued upwards?

Reference no: EM132056101

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