Comp-IT (Pty) Ltd incurred the following expenditures during the year ended 31 December 2023. Item Licence...

  

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Comp-IT (Pty) Ltd incurred the following expenditures during the year ended 31 December 2023. Item Licence from the government to operate in its business sector for five years from 1 January 2023 Planning costs - new website, which will be launched in 2024 Purchase of laptops for employees on 1 January 2023 Microsoft user licenses purchased on 1 January 2023 Training of new employees Consultancy fees (including VAT at15%) Legal cost (including VAT at15%) Useful life of the intangible asset is 5 years. Rand 1 200 000 60 000 120 000 120 000 80 000 75 000 30 000 On 31 December 2023 the company expected the revenue from the license to decrease as the government gazetted new laws whereby more licenses were released into the market. This was an indication of possible impairment. Management prepared the following cash flow forecasts: Year 2024 2025 2026 2027 Rands 410 000 350 000 315 000 295 000 The pre-tax discount rate of the company is 14.50% The current gross selling price of the license in the market is R950 000. The estimated net cost to sell is R82 500. Required: Q.3.1 Calculate the initial cost of the intangible asset as at 1 January 2023. Include in your answer the amounts that are not part of the cost of an intangible asset (show the amounts as -) and state the reason why they are excluded. Q.3.2 Calculate the carrying amount of the intangible asset as at 31 December 2023. Q.3.3 Calculate the recoverable amount of the intangible asset as at 31 December 2023. Round off the discount factors to four decimal places and final answers to the nearest rand. Comp-IT (Pty) Ltd incurred the following expenditures during the year ended 31 December 2023. Item Licence from the government to operate in its business sector for five years from 1 January 2023 Planning costs - new website, which will be launched in 2024 Purchase of laptops for employees on 1 January 2023 Microsoft user licenses purchased on 1 January 2023 Training of new employees Consultancy fees (including VAT at15%) Legal cost (including VAT at15%) Useful life of the intangible asset is 5 years. Rand 1 200 000 60 000 120 000 120 000 80 000 75 000 30 000 On 31 December 2023 the company expected the revenue from the license to decrease as the government gazetted new laws whereby more licenses were released into the market. This was an indication of possible impairment. Management prepared the following cash flow forecasts: Year 2024 2025 2026 2027 Rands 410 000 350 000 315 000 295 000 The pre-tax discount rate of the company is 14.50% The current gross selling price of the license in the market is R950 000. The estimated net cost to sell is R82 500. Required: Q.3.1 Calculate the initial cost of the intangible asset as at 1 January 2023. Include in your answer the amounts that are not part of the cost of an intangible asset (show the amounts as -) and state the reason why they are excluded. Q.3.2 Calculate the carrying amount of the intangible asset as at 31 December 2023. Q.3.3 Calculate the recoverable amount of the intangible asset as at 31 December 2023. Round off the discount factors to four decimal places and final answers to the nearest rand.

Answer rating: 100% (QA)

Calculate the initial cost of the intangible asset as of 1 January 2023 Q31 Calculate the Initial Cost of the Intangible Asset as of 1 January 2023 Li... View the full answer