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A company purchased a patent for 10 years to produce a vacuum cleaner costing £1 million on 1 July 2019. Legal fees relating to the purchase amounted to a further £200,000. The company spent £300,000 testing the new vacuum cleaner and £150,000 on advertising costs. One year later, the net selling value of the patent was £1,400,000.
Problem (i) How much should the patent be recognised on 1 July 2019?
Problem (ii) Explain clearly the amount you would expect the patent to be disclosed as on 30 June 2020?
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