Planet Lestari Sdn$.$ Bhd$.$ is a manufacturer of a plastic bottle recyclable. The accounting period

ends on every December $31.$ Information on intangible assets are as follows:

$1.$ Beginning balance of intangible assets

The balance of intangible assets on January $1,2020,$ are as follows:

Computer software Patent

RM RM

Cost $296,00084,000$

Accumulated amortization $148,000-$

Carrying amount $148,00084,000$

$2.$ New production technology

Planet Lestari was developing a new production technology that started in May $2020.$ The

technology is expected to be patented when it is completed and can be commercialized. An

estimated cost for this project was RM$850,000.$ The total of RM$170,980$ incurred in the

current year was in the research phase.

$3.$ Patent

The patent was acquired from Jitu Tech Sdn$.$ Bhd$.$ On December $1,2019,$ at RM$84,000.$ The

technology from this patent can only be used in the production process starting in $2020.$ The

patent has an exclusive right to be used in the production for another eight years. However,

Planet Lestari expects to change to a newly developed technology in another six years.

$4.$ Accounting policies for intangible assets

a$)$ The amortization method for intangible assets is a straight$-$line method. A full$-$year

amortization is charged in the year the asset is acquired and no amortization in the

year the asset is disposed.

b$)$ The computer software is amortized for four years. The amortization expense of

computer software for $2020$ amounted to RM$73,700.$

c$)$ Amortization of a patent is based on the expected legal life or economically useful

life.

d$)$ Planet Lestari chose to adopt MFRS in preparing its financial statements.

EPPA $2013$

$3$

Required:

a$)$ Explain, in reference to MFRS $138$ Intangible Assets:

i$)$ the difference between accounting treatment for intangible assets with definite

and indefinite useful life.

ii$)$ whether the expenses incurred in developing a new technology during the current

year should be capitalized.

iii$)$ how the acquisition of a patent should be accounted for.

b$)$ Show the presentation of the intangible assets in the Statement of Financial Position

on December $31,2020($Presentation in the body of the statement and the notes to the

account$)$

Answer rating: 100% (QA)

a According to MFRS 138 Intangible Assets the accounting treatment for intangible assets with definite and indefinite useful ... View the full answer