Berrie Electric Inc. has the following amounts included in its general ledger at December 31, 2020: Organization costs $34,000 Purchased trademarks 17,500 Development phase activities (meet all six development phase criteria) 29,000 Deposits with advertising agency for ads to promote goodwill of company 8,000 Excess of cost over fair value of identifiable net assets of acquired subsidiary 81,000 Cost of equipment acquired for research and development projects; the equipment has an alternative future use 125,000 Cost of researching a secret formula for a product that is expected to be marketed for at least 20 years 75,000 Payment for a favourable lease; lease term of 10 years 15,000 Instructions: a) Based on the information provided, calculate the total amount for Berrie to report as intangible assets on its statement of financial position at December 31, 2020. Assume Berrie uses IFRS to prepare its financial statements. b) If an item should not be included in intangible assets, explain the proper treatment for reporting it. c) Indicate which amounts might be reported differently if ASPE were followed instead of IFRS.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Berrie Electric Inc. has the following amounts included in its general ledger at December 31, 2020:
Organization costs	$34,000
Purchased trademarks	17,500
Development phase activities (meet all six development phase criteria)	29,000
Deposits with advertising agency for ads to promote goodwill of company	8,000
Excess of cost over fair value of identifiable net assets of acquired subsidiary	81,000
Cost of equipment acquired for research and development projects; the equipment has an alternative future use	125,000
Cost of researching a secret formula for a product that is expected to be marketed for at least 20 years	75,000
Payment for a favourable lease; lease term of 10 years	15,000

Instructions: a) Based on the information provided, calculate the total amount for Berrie to report as intangible assets on its statement of financial position at December 31, 2020. Assume Berrie uses IFRS to prepare its financial statements.






b) If an item should not be included in intangible assets, explain the proper treatment for reporting it.


c) Indicate which amounts might be reported differently if ASPE were followed instead of IFRS.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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