Jade Ltd is now considering how to obtain a computer software. The director of Jade Ltd has noticed that over the last 20 years, many companies have spent a great deal of money internally developing new intangible assets, such as software. You have been asked by the director to provide your advice on the accounting treatments of the two possibilities below: (i) Employ its own programmers to write software that the company will use (ii) Purchase computer software externally, including packages for payroll and general ledger. Required: In accordance with IAS 38 / AASB 138 Intangible Assets, discuss whether internally developed intangible
Jade Ltd is now considering how to obtain a computer software. The director of Jade Ltd has noticed that over the last 20 years, many companies have spent a great deal of money internally developing new intangible assets, such as software. You have been asked by the director to provide your advice on the accounting treatments of the two possibilities below:
(i) Employ its own programmers to write software that the company will use
(ii) Purchase computer software externally, including packages for payroll and general ledger.
Required:
In accordance with IAS 38 / AASB 138 Intangible Assets, discuss whether internally developed intangible assets should be recognised, and explain the differ in the accounting treatments for the two possible options.
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