Part II (3 marks) The following draft financial information has been extracted from the Statement of...

 

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Part II (3 marks) The following draft financial information has been extracted from the Statement of Financial Position of Ben Ltd for the year ended 30 June 2022. ● ● ● Intangibles Patent less accumulated amortisation Goodwill-internal Development asset Smillion 100 (10) $million 90 20 30 Additional information provided by the junior accountant: On 1 July 2021, the patent was externally acquired at a cost of $80 million from XY Ltd and subsequently revalued to $100 million. The useful life of the patent is 10 years. The company has spent significant amount of money in training its workforce and managing its customers and suppliers. The Board of Ben Ltd estimates that this has generated goodwill in the business of $20 million as of 30 June 2022. Ben Ltd.'s management has decided to capitalise expenditure on research activities of $30 million as a development asset because in their opinion future economic benefits will probably eventuate. Required: Do you agree with the intangible assets reporting reflected in Ben Ltd.'s draft financial statements, are in accordance with AASB 138 Intangible Assets? Explain your answer and clearly indicate the appropriate accounting treatment if the one reflected in the drafted financial statement is not correct. Part II (3 marks) The following draft financial information has been extracted from the Statement of Financial Position of Ben Ltd for the year ended 30 June 2022. ● ● ● Intangibles Patent less accumulated amortisation Goodwill-internal Development asset Smillion 100 (10) $million 90 20 30 Additional information provided by the junior accountant: On 1 July 2021, the patent was externally acquired at a cost of $80 million from XY Ltd and subsequently revalued to $100 million. The useful life of the patent is 10 years. The company has spent significant amount of money in training its workforce and managing its customers and suppliers. The Board of Ben Ltd estimates that this has generated goodwill in the business of $20 million as of 30 June 2022. Ben Ltd.'s management has decided to capitalise expenditure on research activities of $30 million as a development asset because in their opinion future economic benefits will probably eventuate. Required: Do you agree with the intangible assets reporting reflected in Ben Ltd.'s draft financial statements, are in accordance with AASB 138 Intangible Assets? Explain your answer and clearly indicate the appropriate accounting treatment if the one reflected in the drafted financial statement is not correct.

Answer rating: 100% (QA)

1Patent are acquired internally and is meeting all the requirements of recognition as an intangibel ... View the full answer