(a) In September 2020 Musk Enterprises unveiled plans to develop a tabless battery that could improve an electric car’s range and power. Musk Enterprises has spent $50 million on this Tabless battery and feel they are close to being able to consider this as a possible new product line.

Required
According to the Accounting Standard AASB138 Intangible Assets, how should the $50 million spent in the year ended 30 September 2020 be recorded in the accounting records of Musk Enterprises?

(b)   Assume the circumstance in June 2021 is that Musk Enterprises tabless battery is found to be successful and will be a product they can sell

Required
Briefly explain how would the $50 million spent on the product be treated in 2021 in the accounting records of Musk Enterprises?

(c) Planned changes to Government Environmental Targets during 2022 will result in the banning of selling lead-based batteries.  Long Time Batteries Ltd.’s Trial Balance as at 31 December 2022 had a Development Asset, to the value of $15 million.

The products generated from this development asset will no longer be able to be sold.

Required
Briefly explain how this $15 million will be treated in the accounting records of Long Time Batteries Ltd in 2022. It is not necessary to state detailed requirements from AASB138 Intangible Assets.

Answer rating: 100% (QA)

ANSWER a As per AASB138 No intangible asset arising from researc... View the full answer