Refer to the extracts from the annual reports 2002–03 and 2003–04 of Colgate-Palmolive (India) Ltd. regarding intangible assets as illustrated in this chapter. Analyse the cases and attempt the following requirements:
1. Examine and analyse the compliance of AS-26 in the 2003–04 annual report. Are there any deviations?
2. Is the adjustment of past amortisation expenses, to the extent not recognised earlier, to opening general reserve justified? Should not such expenses be charged through current year’s profit and loss account? Opine.
3. Is the presumption of life of intangible assets as 10 years fairer than longer periods, such as, 40/14/21 years in this case? Opine.
4. Assess the impact of change in the intangible assets amortisation policy on the financial statements of 2003–04.
5. Why the amortization for the year 2003–04 is Rs. 528.32 lacs? Based on SLM, should it not be a different figure? Analyse.
6. Had AS-26 been followed from the day Colgate generated/acquired intangible assets what would have been the impact on its financial statements of 2002–03? Assess.