Reference no: EM132773967
Question - Intangible Assets - XYZ Ltd reports the following intangible assets on 30 June 2020:
Patents at directors' valuation $160 000
Less Accumulated amortisation (40 000)
Brand name at fair value 100 000
Licence at cost $100 000
Less Accumulated amortisation (10 000)
Additional information: Patents were acquired at a cost of $80 000 on 1 July 2016. They have an estimated life of 16 years, of which 12 years remain on 30 June 2020.
The brand name is stated at fair value and is internally generated.
The licence, acquired one year ago, has a 10-year life of which nine years remain. The licence can be traded in an active market and has a fair value of 1.1 million.
Some of the treatments by XYZ may be inconsistent with the accounting standards AASB 138 "Intangible Assets".
REQUIRED - For EACH intangible asset, specify and briefly justify the following accounting decisions in accordance with AASB 138 'Intangible Assets':
1. How should the intangible asset be initially recognized?
2. What is the appropriate subsequent measurement basis (i.e., measurement model) of the recognised asset?
3. Is the recognised asset subject to amortization?
4. Calculate the carrying amount of each asset at 30 June 2020. No journal entry is required.