Francis-Toure (FT) Ltd adopts revaluation model for subsequent measurement of its intangible assets in accordance with IAS 38: Intangible assets. The policy of FT is to revalue its intangible asset at the end of each year. An intangible asset with an estimated useful life of 9 years was acquired on 1 January 2018 for GH¢45,000. It was revalued to GH¢54,400 on 31 December 2018 and the revaluation surplus was correctly recognized on that date. As at 31 December 2019, the asset was revalued at GH¢32,000. Discuss the accounting treatment required in 2018 and 2019 financial statements.
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Francis-Toure (FT) Ltd adopts revaluation model for subsequent measurement of its
intangible assets in accordance with IAS 38: Intangible assets. The policy of FT is to
revalue its intangible asset at the end of each year. An intangible asset with an estimated
useful life of 9 years was acquired on 1 January 2018 for GH¢45,000. It was revalued to
GH¢54,400 on 31 December 2018 and the revaluation surplus was correctly recognized on
that date. As at 31 December 2019, the asset was revalued at GH¢32,000.
Discuss the accounting treatment required in 2018 and 2019 financial statements.
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- QUESTION 1 Polycarp Ltd adopts revaluation model for subsequent measurement of its intangible assetsin accordance with IAS 38: Intangible assets. The policy of Polycarp is to revalue itsintangible asset at the end of each year. An intangible asset with an estimated useful life of9 years was acquired on 1 January 2018 for GH¢45,000. It was revalued to GH¢54,400 on31 December 2018 and the revaluation surplus was correctly recognized on that date. Asat 31 December 2019, the asset was revalued at GH¢32,000. Required: Discuss the accounting treatment required in 2018 and 2019 financial statements. QUESTION 2 E. Adentwi Enterprises Ltd bought a machine for GH₵ 150,000 on 1st January 2019. It depreciates the machine on cost over four years assuming a nil residual value. The company received a grant of GH₵30,000 from the municipal assembly to support the acquisition of the machines. Required: Account for this grant under the netting off method.d. Polycarp Ltd adopts revaluation model for subsequent measurement of its intangible assets in accordance with IAS 38: Intangible assets. The policy of Polycarp is to revalue its intangible asset at the end of each year. An intangible asset with an estimated useful life of 9 years was acquired on 1 January 2018 for GH¢45,000. It was revalued to GH¢54,400 on 31 December 2018 and the revaluation surplus was correctly recognized on that date. As at 31 December 2019, the asset was revalued at GH¢32,000. Required: Discuss the accounting treatment required in 2018 and 2019 financial statements.MNO Ltd adopts fair value for subsequent measurement of its intangible assets. An intangible with an estimated useful life of 9 years was acquired on 1 January 2012 for GHC90,000. It was revalued to GHC108,800 on 31 December 2012 and the revaluation surplus was correctly recognized on that date. As at 31 December 2013, the asset was revalued at GHC64,000. Required: State the accounting treatment required in 2012 and 2013 financial statements
- During 2015, PJM Bhd incurred further development expenditure of RM3 million on the new process which meets the recognition criteria for capitalization of an intangible asset. Required (a) In the light of MFRS138 Intangible Asset, briefly explain how each of the above transaction should be accounted for in the financial statements of PJM Bhd for the year ended 31 December 2017.Surgimed Ghana Ltd. acquired a property for GH¢4 million with annual depreciation of GH¢300,000on the straight line basis. At the end of the previous financial year at 31st December, 2019, whenaccumulated depreciation was GH¢1 million, a further amount relating to an impairment loss of$350,000 was recognised, which resulted in the property being valued at its estimated value in use.On 1st May, 2020, as a consequence of a proposed move to new premises due to the COVID 19restrictions, the property was classified as held for sale. At the time of classification as held for sale,the fair value less costs to sell was GH¢2·4 million. On 1st July, 2020, the property market hadimproved and the fair value less costs to sell was reassessed at GH¢2·52 million and at the year-endon the 31st December, 2020, it had improved even further, so that the fair value less costs to sell wasGH¢2·95 million. The property was sold on 5th January, 2021for GH¢3 million.RequiredThe directors of Surgimed Ghana Ltd.…1. E. Adentwi Enterprises Ltd bought a machine for GH₵ 150,000 on 1st January 2019. It depreciates the machine on cost over four years assuming a nil residual value.The company received a grant of GH₵30,000 from the municipal assembly to support the acquisition of the machines. required :Account for this grant under the netting off method. 2. Polycarp Ltd adopts revaluation model for subsequent measurement of its intangible assets in accordance with IAS 38: Intangible assets. The policy of Polycarp is to revalue its intangible asset at the end of each year. An intangible asset with an estimated useful life of 9 years was acquired on 1 January 2018 for GH¢45,000. It was revalued to GH¢54,400 on 31 December 2018 and the revaluation surplus was correctly recognized on that date. As at 31 December 2019, the asset was revalued at GH¢32,000.Required:Discuss the accounting treatment required in 2018 and 2019 financial statements.
- As at 31 December 2020, Aura Plc has a development asset on its Statementof Financial Position of £378,000 in respect of Project Alpha. Project Alphacommenced on 1 July 2020 and costs have been incurred evenly since thatdate. All costs have been capitalised since 1 July 2020.When reviewing the financial statements ahead of year end, it was discoveredthat this project was only determined to be commercially viable from 1 August2020.Which journal entry is required to correct the financial statements of Aura Plcfor the year ended 31 December 2020?a) DEBIT Research costs- Income statement £63,000CREDIT Intangible assets £63,000b) DEBIT Research costs- Income statement £31,500CREDIT Intangible assets £31,500c) DEBIT Intangible assets £63,000CREDIT Research costs- Income statement £63,000d) DEBIT Research costs- Income statement £315,000CREDIT Non-current assets £315,000On January 1, 2022, J Company acquired an intangible asset from a foreign company. The invoice price of the intangible was P5,000,000 subject to a 10% discount if acquired on a cash basis. J Company paid P500,000 import duties and professional fees of P50,000 in relation to its acquisition. At what amount should the intangible asset be initially recorded in the books of J Company? NOTE: ANSWER ONLYSurgimed Ghana Ltd. acquired a property for GH¢4 million with annual depreciation of GH¢300,000 on the straight line basis. At the end of the previous financial year at 31st December, 2019, when accumulated depreciation was GH¢1 million, a further amount relating to an impairment loss of $350,000 was recognised, which resulted in the property being valued at its estimated value in use. On 1st May, 2020, as a consequence of a proposed move to new premises due to the COVID 19 restrictions, the property was classified as held for sale. At the time of classification as held for sale, the fair value less costs to sell was GH¢2·4 million. On 1st July, 2020, the property market had improved and the fair value less costs to sell was reassessed at GH¢2·52 million and at the year-end on the 31st December, 2020, it had improved even further, so that the fair value less costs to sell was GH¢2·95 million. The property was sold on 5th January, 2020 for GH¢3 million.RequiredThe directors of Surgimed…
- The following previously unreported intangible assets were acquired by a U.S. company in a business combination. Their beginning-of- current-year book values and allocation to reporting units are listed below. Trade names Distribution network Goodwill Trade names Distribution network Reporting Unit #1 Reporting Unit #2 $14,000 Both identifiable intangibles have a 5-year remaining life. Information for year-end impairment testing is as follows: Sum of Expected Sum of Expected Future Undiscounted Future Discounted Cash Flows Cash Flows 70,000 Select one: O a. $7,700 O b. $5,040 C. $9,240 d. $7,000 $11,200 56,000 $12,600 8,400 O Information for year-end goodwill impairment testing is as follows: Reporting Reporting Unit #1 Unit #2 Fair value Book value before year-end adjustments for identifiable intangible amortization and impairment charges $10,500 7,000 $47,600 49,000 $36,400 For consolidation eliminating entry (O), what amount will be reported as expense for identifiable intangibles…MacPro Property Bhd acquired an investment property on 1 January 2015 and measured it using the cost model. On 1 January 2018, MacPro Property Bhd changed the accounting policy and used the fair value model to measure investment property. The acquisition cost of the property was RM70 million and the estimated useful life was 35 years. The fair values of the property were measured as below: Date RM (in million) 31/12/2015 72 31/12/2016 74 31/12/2017 78 31/12/2018 83 Profit after depreciation on investment property but before tax for 2017 and 2018 were RM80 million and RM95 million, respectively. Retained earnings brought forward on 1 January 2017 and 2018, were RM150 million and RM210 million, respectively. Assume that tax rate for 2017 and 2018 was 25%. REQUIRED: Discuss the accounting treatment of the above transaction in accordance to MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors. Prepare the comparative…An intangible asset with an estimated useful life of30 years was acquired on January 1, 2007, for $540,000.On January 1, 2017, a review was made of intangibleassets and their expected service lives, and it was determinedthat this asset had an estimated useful life of 30more years from the date of the review. What is theamount of amortization for this intangible in 2017?