b$)$

$(9$ Marks$)$

Mathew Fricker is newly appointed Chief Executive Officer of a catering

company purchased on $1$ January $2022$ from Royal Caterers $($RS$).$ He seeks

your advice on whether he could report the following resources as an

intangible asset in their financial statements.

i$.$ He obtained from RS a list of corporate customers who have remained

regulars for over a year and their total revenue has usually been

worth in excess of $11$ million per year.

Page $5$ of $7$

ii$.$ A logo and the brand name used by RS are very well known and are

significant reason for winning catering contract. Mathew feels that the

brand name should have a market appeal for at least $15$ more years

and that, in the circumstances, he would have been willing to pay

$400,000$ to take over the logo together with its brand name.

iii. As a way of cultivating customer loyalty Mathew sent lavish Christmas

hampers to all the corporate customers in the list referred to in $($a$)$

above, at a cost of $540,000.$

Required

How would you advise Mathew?