Reference no: EM132687805
Intangible Assets
Patents at directors' valuation$160 000
Less Accumulated amortisation(40 000)
XYZ Ltd reports the following intangible assets on 30 June 2020:
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':
Problem 1: How should the intangible asset be initially recognized?
Problem 2: What is the appropriate subsequent measurement basis (i.e., measurement model) of the recognised asset?
Problem 3: Is the recognised asset subject to amortization?
Problem 4: Calculate the carrying amount of each asset at 30 June 2020. No journal entry is required.
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