Answered: Required: Discuss how to account for…

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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Question

C) Alex Ltd is a manufacturing company located in Accra. The company is preparing its financial statements for the year to 31st December 2017. The company has incurred the following expenditure:

A brand name for a special fruit juice purchased for GH¢250,000. By the year end the brand specialist had valued this at GH¢350,000.

Alex spent GH¢800,000 developing a new line of nonalcoholic wine. GH¢250,000 was spent researching the product before management gave approval to fully fund the project.

Training costs for the staff to use the new manufacturing process. The total training costs amounted to GH¢180,000 and the staff have agreed to work for a minimum of five years for the company.

Required:

Discuss how to account for the above transaction in accordance with IAS 38: intangible assets.

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