Shadeed Limited

Purchase price: The purchase price should be capitalised, but this must exclude
800,000 - 80,000 720,000
refundable taxes.
Legal costs: This is a directly attributable cost. Directly attributable costs must
Given 50,000
be capitalised.
Overhead costs: This is an incidental cost not necessary to the acquisition of
Incidental costs may not be
the rights (the shut-down was only necessary because Bee had been operating -
capitalised
illegally).
Operating loss: The operating loss incurred while demand for the product Costs incurred after the IA is
increased to its normal level is an example of a cost that was incurred after the available for use may not be -
rights were acquired. capitalised
Advertising campaign: The extra advertising incurred in order to recover
Costs incurred after the IA is
market share is an example of a cost that was incurred after the rights were
available for use may not be -
acquired. Furthermore, advertising costs are listed in IAS 38 as one of the costs
capitalised
that may never be capitalised as an intangible asset.
770,000

Mazeed Limited
The most significant element would be the tangible machine. Since the software is integral to the machine (i.e. it is not stand-
alone software, but is software that has been designed specifically to enable the operation of this machine), the cost of the
software would be recognised as part of the machine and thus accounted for as property, plant and equipment (IAS 16).
However, if the software was ‘standalone’ software (i.e. the software could be used in a different platform and the machine
could operate without it, e.g. the software simply enhanced its operations), it would have been accounted for as an intangible
asset (IAS 38).

Identifiability
Jadugar Limited

Acquired goodwill, which is recognised an asset: it arises during business combinations and represents the synergies of all those
assets that were acquired but which were not separately identifiable and thus not able to be separately recognised.

Jadugarni Limited

Internally generated goodwill, which is recognised as an expense: it also refers to the synergies from a group of assets but the
costs involved in creating internally generated goodwill are so similar to the general running costs of a business, that they are
expensed. (e.g. how much of a teller’s salary relates to her (a) doing her job, which must be expensed; and (b) her smiley face
which pleases our customers and thus generates goodwill?). The fact that the cost of creating goodwill and the cost of simply
running a business means that internally generated goodwill is not reliably measurable.
 Chamar limited

The cost of the advertising campaign is not separable as it cannot be separated from the entity and sold, transferred, rented or
exchanged etcetera.
Furthermore, the advertising campaign does not arise from contractual or legal rights. Thus the cost of the advertising campaign
is not identifiable. Even if the other aspects of the definition and recognition criteria are met, the advertising costs may not be
recognised as an intangible asset: they create internally generated goodwill and must thus be expensed.

Aww Limited
The business rights are not separable since the contract expressly states that the rights may not be transferred by Haww Limited
to another entity. However, identifiability of an asset does not require it to be separable – it can also be proved if it arises from
contractual or legal rights. Thus, since the business rights were awarded by way of a contract, they are contractual rights and are
thus considered to be identifiable. If the other aspects of the definition and the recognition criteria are met, these rights will be
recognised as a separate intangible asset.

Control
Shabana Limited

Even if this training can be linked to an expected increase in future economic benefits, the training cost is unlikely to be
recognised as an intangible asset as, despite permanent employment contracts, it is difficult to prove that there is sufficient
control over both the employees (who can still resign) and the future economic benefits that they might generate. If we cannot
prove control,
'- the item is not an asset – and
'- if the item is not an asset, it automatically cannot be an intangible asset either
 Tabahi Limited

Workings:
Year Total Exclusions Net Amount ellgible for apportionment Time Capitalized amount
2015 180,000 (60,000) 120,000 ( 9/12 ) 90,000
2016 100,000 - 100,000 ( 12 / 12 ) 100,000
2017 80,000 (30,000) 50,000 ( 12 / 12 ) 50,000

Entries:
2015 Debit Credit
Expense 90,000
Year 2015
Development asset 90,000
Cash 180,000

2016 Debit Credit

Expense 100,000 Year 2016
Cash 100,000

2017 Debit Credit

Expense 50,000
Year 2017
Development Asset 30,000
Cash 80,000

Heer Limited

Workings:
Year Total Exclusions Net Amount ellgible for apportionment Time Capitalized amount
2018 700,000 (100,000) 600,000 ( 7/12 ) 350,000
Add: Purchase cost Research + Development 300,000
650,000

2018 Debit Credit

Expense 350,000
Year 2018
Development Asset 650,000
Cash 1,000,000
 Heer Limited

Heer Limited
Notes to the financial Statements
for the year ended 30 june 2016

Brand Software License Development Total

Gross Carrying Amount ast at July 1, 2015 200 80 15 - 295
Accumulated Amortization/Impairment (40) (48) - - (88)
Net Carrying Amount as at July 1, 2015 160 32 15 - 207

Additions "Working 1" - 120 - 30 150

Less :
Amortization "Working 2" (20) (15) (0.75) (0.75) (37)
Impairment "Working 3" - (20) - - (20)
Net Carrying Amount as at June 30, 2016 140.00 117.00 14.25 29.25 300.50

Gross Carrying Amount ast at June 30, 2016 200 200 15 30 445
Accumulated Amortization/Impairment (60) (83) (0.75) (0.75) (145)
Net Carrying Amount as at June 30, 2016 140.00 117.00 14.25 29.25 300.50

Workings
Working 1: Additions
Software
Purchase price 115
Training to staff - Specifically dissallowed
Consultancy charges 5
120

Development Adjustment ii

Expenditure july 2015 to march 2016 45

Project becomes viable on 30 Sept and (6/9)

opreational on 1st april
6 Months Expense 30

Working 2 : Amortization
9 months
Particulars Cost Addition Life Amortization
Brand 200 - 10 20
3 months
Cost Addition Life Time Factor Amortization
Software (Opening) 80 - 5 0.75 12.00
Software (Addition) - 120 10 0.25 3.00
15.00
6 months

Cost Addition Life Time Factor Amortization

License 15 - 10 0.50 0.75
3 months

Cost Addition Life Time Factor Amortization

Development - 30.00 10 0.25 0.75

Working 3 : Impairment

Cost Acc Amor op Amortization for 9 months Total Acc amo Net CA for Write off
Software (Opening) 80 (48.00) (12) (60.00) 20.00

Adjustment iv
Internally generated brand are expensed out specifically dissallowed.
 Jordan Limited

Jordan Limited
Notes to the financial Statements
for the year ended 30 june 2015
Development
Goodwill Patents Total
Chintu Candy Chilli mili
Gross Carrying Amount ast at July 1, 2013 1,500 400 - - 1,900
Accumulated Amortization/Impairment (300) (160) - - (460)
Net Carrying Amount as at July 1, 2013 1,200 240 - - 1,440

Additions "Working 1" 1,822 2,100 33 68 4,023

Less :
Retirement/Disposal - - (33) (3) (36)
Amortization "Working 2" - (250) - - (250)
Impairment "Working 3" (472) - - - (472)
Net Carrying Amount as at June 30, 2016 2,550.00 2,090.00 - 65.00 4,705.00

Gross Carrying Amount ast at June 30, 2014 3,322 2,500 - 68 5,890
Accumulated Amortization/Impairment (772) (410) - (3.00) (1,185)
Net Carrying Amount as at June 30, 2014 2,550.00 2,090.00 - 65.00 4,705.00

Additions "Working 1" - - - 72 72

Less :
Amortization "Working 2" - (250) - - (250)
Impairment/ Reversal "Working 3" - - - 3.00 3
Net Carrying Amount as at June 30, 2016 2,550.00 1,840.00 - 140.00 4,530.00

Gross Carrying Amount ast at June 30, 2014 3,322 2,500 - 140 5,962
Accumulated Amortization/Impairment (772) (660) - - (1,432)
Net Carrying Amount as at June 30, 2014 2,550.00 1,840.00 - 140.00 4,530.00

2014 2015
Working 1: ( Additions ) Working 1: ( Additions )
Development cost upto march 2015 50
Cosideration 5,400 Net cost of trial production 22 Reversal of only previously
Net Assets Breakup: 72 booked impairment
Patents (2,100)
Development Expenditure Amortization "Working 2"
- Chintu Candy (25)
- Chili mili (23) Particulars Cost Addition Life Amortization
Other net assets (1,430) Patents 2,500 - 10 250
1,822
Working 3: Impairment Test
Further Expenditures on development
2014 Goodwill
Chintu Candy 8 CA RA Impairment
Chili mili 45 2,550 2800 (250) no impact as goodwill once impaired can't be reversed.
53
Chilli mili (Development)
CA RA Impairment
140 160 (20)
Amortization "Working 2"

Particulars Cost Addition Life Amortization

Patents 400 2,100 10 250

Working 3: Impairment Test

Goodwill
CA RA Impairment
3,022 2550 472

Chili milli ( development )

CA RA Impairment
68 65 3
 Chutku limited
As at 31 december 2015
Balance Sheet Extracts:
Notes
Property, plant and Equipment 1 25,500
Intangibles 2 320,000

Chutku limited
for the year ended 31 december 2015

Notes
1 Property, plant and equipment

Op Cost -
Op Acc Dep -
-

Additions 30,000
Depreciation (4,500)
25,500

1 Intangibles
Compeleted CWIP
Project A Project B Total
Op Cost 412,500 - 412,500
Op Acc Amortization - - -
412,500 - 412,500

Additions - 45,000 45,000

Amortization (137,500) - (137,500)
Closing WDV 275,000 45,000 320,000
 Guglu Limited
Intangibles
Op 2014 - Impair 50,000,000
Addition W1 270,000,000
Cl 2014 220,000,000.00

Op 2015 220,000,000

Cl 2015 220,000,000

Brand
Op 2014 - Amortiz 10,000,000
Addition 100,000,000
Cl 2014 90,000,000.00

Op 2015 90,000,000 Amort 10,000,000

Impair 13,500,000
Cl 2015 66,500,000

Impairment Testing:
Carrying amount 80,000,000
RA (66,500,000)
13,500,000

W1: Calculation of goodwill:

Cosideration 1,350,000,000
(500,000,000 / 10 x 90% x 30 )
Less: Net Assets
Other than intangibles (990,000,000) 1,100,000,000 x 90%
Intangibles (90,000,000) 100,000,000 x 90%
270,000,000
 Shakuntala Limited
1 Intangibles
Patents Brand Development Cost Total
Op Cost - - 7.00 7.00
Op Acc Amortization - - - -
- - 7.00 7.00

Additions 17.00 2.00 12.00 31.00

Amortization (2.83) (0.12) - (2.95)
Closing WDV 14.17 1.88 19.00 35.05

Amortization on 5 ((36/12 x 3) + 3
years because renewal
cost is significant
 Lal khanchandani

Total Assets Net Profit

Given 2,700 398

Incorrect capitalization (31.78) (31.78)

Amortization not charged (7.51) (7.51)
Depreciation not charged (30.00) (30.00)
Revised Amounts 2,631 329

Calculation of correct amount to be capitalized:

Staff Salary 23.33 ( 30 / 9 x 7 )

Depreciation of equipment 42.00
Consultant Fee 164.89 (212 / 9 x 7)
Consumables 70.00 ( 90 / 9 x 7 )
Amount to be capitazlied as intangibles 300.22
Amount to be capitalized in PPE 360.00
Total To be Capitalized in asset 660.22
Capitalized Amount 692.00 42 k bhund in this solution
Reversal in Assets 31.78

P&L Adjustments
Amortization not recorded 7.51 ( 300.22 / 10 x 3 / 12 )
Depreciation not recorded 30.00 ( 360 / 5 x 5 / 12 )

Particulars DR CR
P&L - reversal 31.78
Assets 31.78

Particulars DR CR
Amortization 7.51
Assets 7.51

Particulars DR CR
Depreciation 30.00
Assets 30.00
 Aunty shabo quiz solution

A B C D Total
Cost 200 230 90 60 580
Life used 10 years 10.00 6 years 12 years
Amortization (20.00) (23.00) (15.00) (5.00) (63)
Carrying amount 180.00 207.00 75.00 55.00 517
Revaluation Surplus / (loss) (10.00) 93.00 (10.00) - 73
Carrying amount 170.00 300.00 65.00 55.00 590.00
2 marks 2 marks 3 marks 3 marks
Because renewal cost

Profit and Loss Extracts

Amortization (63.00) 0.5 makrs

Revaluation Loss (20.00) 2.0 Marks
(83.00)

Balance Sheet Extracts

Intangibles 590.00
2.5 Marks
Revaluation surplus 93.00
 Sunshine limited solution

A B C D Total
Cost 200 230 90 60 580
Life used 10 years 10.00 6 years 12 years
Amortization (20.00) (23.00) (15.00) (5.00) (63)
Carrying amount 180.00 207.00 75.00 55.00 517
Revaluation Surplus / (loss) (10.00) 93.00 (10.00) - 73
Carrying amount 170.00 300.00 65.00 55.00 590.00
2 marks 2 marks 3 marks 3 marks
Because renewal cost

Profit and Loss Extracts

Amortization (63.00) 0.5 makrs

Revaluation Loss (20.00) 2.0 Marks
(83.00)

Balance Sheet Extracts

Intangibles 590.00
2.5 Marks
Revaluation surplus 93.00