In each of the following scenarios (i) to (iv), advise on the appropriate accounting treatment for the intangible assets for year ended 31 March 2018. On 1 April 2017, HHH acquired, from a bankrupt competitor, a license to provide radio broadcast services to a region within Ireland. This license would have been originally issued by the government for a ten-year period at zero cost, but has a market value due to its exclusivity. The cost of the license to Handsetter was RM3.3 million, and the remaining useful economic life was 6 years. i. ii. On 1 April 2017, HHH commenced work on developing a new technology to enhance the quality of the radio broadcasts. It purchased a number of patents at a cost of RM2 million and spent a further RM6 million developing the technology, as well as RM2 million researching the international market for the technology in advance of its launch. The directors of HHH were confident throughout the development process that the technology had massive potential to generate future economic benefit. On 31 March 2018, this opinion was validated when a rival broadcaster offered HHH RM15 million for its partially developed technology project. i. As a result of HHH's growing reputation in the broadcasting industry, the directors commissioned a consulting firm to value its brand name. The brand name has not been recognised as an asset in the financial statements to date. On 31 March 2018, the consultants issued a report stating that the fair value of HHH's brand was RM20 million. iv. HHH has a portfolio of patents it developed over the past few years. These represent technologies and processes used in the company's business to generate economic benefits. The total carrying value of these patents was RM2.8 million at 1 April 2017. They originally had a 15-year useful economic life, but on average seven years remain to their expiry date. The directors propose, at 31 March 2018, to revalue this portfolio to its estimated fair value of RM5 million.

In each of the following scenarios (i) to (iv), advise on the appropriate accounting treatment for the intangible assets for year ended 31 March 2018. On 1 April 2017, HHH acquired, from a bankrupt competitor, a license to provide radio broadcast services to a region within Ireland. This license would have been originally issued by the government for a ten-year period at zero cost, but has a market value due to its exclusivity. The cost of the license to Handsetter was RM3.3 million, and the remaining useful economic life was 6 years. i. ii. On 1 April 2017, HHH commenced work on developing a new technology to enhance the quality of the radio broadcasts. It purchased a number of patents at a cost of RM2 million and spent a further RM6 million developing the technology, as well as RM2 million researching the international market for the technology in advance of its launch. The directors of HHH were confident throughout the development process that the technology had massive potential to generate future economic benefit. On 31 March 2018, this opinion was validated when a rival broadcaster offered HHH RM15 million for its partially developed technology project. i. As a result of HHH's growing reputation in the broadcasting industry, the directors commissioned a consulting firm to value its brand name. The brand name has not been recognised as an asset in the financial statements to date. On 31 March 2018, the consultants issued a report stating that the fair value of HHH's brand was RM20 million. iv. HHH has a portfolio of patents it developed over the past few years. These represent technologies and processes used in the company's business to generate economic benefits. The total carrying value of these patents was RM2.8 million at 1 April 2017. They originally had a 15-year useful economic life, but on average seven years remain to their expiry date. The directors propose, at 31 March 2018, to revalue this portfolio to its estimated fair value of RM5 million.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Transcribed Image Text:In each of the following scenarios (i) to (iv), advise on the appropriate accounting treatment for the intangible assets for year ended 31 March 2018. On 1 April 2017, HHH acquired, from a bankrupt competitor, a license to provide radio broadcast services to a region within Ireland. This license would have been originally issued by the government for a ten-year period at zero cost, but has a market value due to its exclusivity. The cost of the license to Handsetter was RM3.3 million, and the remaining useful economic life was 6 years. i. ii. On 1 April 2017, HHH commenced work on developing a new technology to enhance the quality of the radio broadcasts. It purchased a number of patents at a cost of RM2 million and spent a further RM6 million developing the technology, as well as RM2 million researching the international market for the technology in advance of its launch. The directors of HHH were confident throughout the development process that the technology had massive potential to generate future economic benefit. On 31 March 2018, this opinion was validated when a rival broadcaster offered HHH RM15 million for its partially developed technology project. i. As a result of HHH's growing reputation in the broadcasting industry, the directors commissioned a consulting firm to value its brand name. The brand name has not been recognised as an asset in the financial statements to date. On 31 March 2018, the consultants issued a report stating that the fair value of HHH's brand was RM20 million. iv. HHH has a portfolio of patents it developed over the past few years. These represent technologies and processes used in the company's business to generate economic benefits. The total carrying value of these patents was RM2.8 million at 1 April 2017. They originally had a 15-year useful economic life, but on average seven years remain to their expiry date. The directors propose, at 31 March 2018, to revalue this portfolio to its estimated fair value of RM5 million.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.