Reference no: EM133169469
Question - Miller Ltd is a well-known concrete machine manufacturer. They are currently dissatisfied with the quality of the current 'splendid finishing' (a part of the concrete machine). Therefore, they have commenced a project to design a more modern and efficient 'splendid finishing' part. The following transactions and events occurred during the 2021 year:
January 2021: Miller Ltd spent $150,000 for the salaries of consultants and engineers who conducted basic tests on the current 'splendid finishing' part to identify the causes of the inefficiency of the current 'splendid finishing' part.
March 2021: Miller Ltd spent $170,000 developing a new 'splendid finishing' part, including the production of a basic model. However, the newly designed model of the 'splendid finishing' part was not successful, because it was not as efficient as required.
June 2021: Miller Ltd spent $150,000 refining and testing a new 'splendid finishing' part. The tests showed the new 'splendid finishing' part produced better quality finishing than those currently available in the market. Accordingly, Miller Ltd was now convinced that it had a viable 'splendid finishing' part.
August 2021: Miller Ltd organised an industry event for building construction companies, to demonstrate and promote its new 'splendid finishing' part. Miller Ltd invited existing and potential clients to the event. The total cost of the function was $20,000, (for venue hire, food, beverages).
September 2021: After receiving positive feedback from existing and potential clients, Miller Ltd incurred further costs of $75,000 to fine tune 'splendid finishing' part. Miller Ltd is now very confident that there is a large market for the new 'splendid finishing' part.
Required - Identify whether each of the above amounts should be expensed or capitalised as an intangible asset. Justify your treatment using the requirements of AASB138: Intangibles Assets.