COMPUTER R US (PTY) LTD is an electronics and software developing and distribution company. During the current reporting period the Research & Development unit reported the following:

1. Mr. Johnson developed as software product while carrying out his normal services.He presented his software product to management and requested that he be paid an amount of R 3 million for the development.Management was not happy to pay the amount because the product was developed during working hours for which Mr. Johnson was paid.Based on recent case law, Mr. Johnson informed management that he may have to pursue the matter via the legal route.The attorneys advised management that the matter should be settled out of court, and that a counteroffer of R 2.5 million should be made.The matter was only settled four months after the reporting date whereby the company paid an amount of R 2.75 million.Furthermore, legal fees of R 360000 were incurred relating to settling the matter. Ms. Peters, the accountant, stated that the amount paid to the employee for the development of the software products cannot be recognised as an intangible asset because the development was not planned therefore the costs cannot be determined reliably.

You are required to:

1. Discuss whether the statement made by Ms. Peters that the amount paid to the employee for the development of the software cannot be recognised as an intangible asset is correct in compliance with the accounting standards.