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Answered Same DayMay 13, 2021ACCM4200


Sweta answered on May 17 2021
50 Votes
396 Ann Street,
QLD 4000
16 May 2019
Mr Martin Wahlburg
Managing Director, Shadow Limited,
Level 5, 99 Mary Street,
Brisbane QLD 4000
Dear Martin
In response to your mail Re. Accounting Issues: Year Ending 30 June 2019, requesting to write a letter to be presented to the board regarding the issues faced by your accounting team in handling two major accounting issues, I am writing this letter.
On evaluation of the accounting issues faced by your company in the context of the present Accounting standards issued by AASB, corporations Act we have presented the accounting method to be followed by the company.
It is to be noted that Patents of the company need to be accounted on the basis of AASB 36 which prescribe that the Intangible Assets should be initially recorded in books at cost. The purchased patent HDBG459 needs to be accounted at cost of purchase $541,000. The Patent obtained as a result of business combination needs to be accounted at fair value. The cost incu
ed in research phase of internally generated intangible asset needs to be debited to profit and loss account and cost incu
ed in development phase needs to be capitalized. The Assets whose value has declined due to obsolescence of technology and needs replacement in the near future needs to be tested for impairment. We believe that there due to existing conditions the recoverable cost would be less than the ca
ying cost of the asset which would create an impairment charge to be debited to Income statement which would set aside funds for replacement of Asset.
In case you have further query regarding the same, please feel free to contact me again.
Yours sincerely,
Ms. Miley Jaspen
Kapland And Associates
Enc: Recommendation on key Issues lette
Recommendations on Key Issues
Issue 1
The Corporations Act 2001 prescribes that the corporates should follow prescribed Accounting standards issued by AASB in the preparation and presentation of financial statements. (Corporations Act 2001, 2018)
The AASB 138/ISB 38 Intangible Assets set standards for accounting for all Intangible Assets except goodwill (AASB 3 Business Combinations) and other intangible assets for which different standards have been prescribed (AASB, 2015).
As per AASB 138.24 an intangible Asset must always be initially measured at cost
As per AASB 138.27, that a purchased Intangible Asset acquired as an individual asset needs to be recorded at
a) Its Purchase cost including import duties and charges and subtracting any discounts and
) Also directly related costs required to put the asset to use.

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