Main Enterprises Ltd (‘Main’) is a farm management company operating in central Scotland. An innovative management approach by the directors has seen the diversification of the business into a number of new areas.
The following information is available in respect of the year ended 31 December 2012.
(i) Main purchased a suckler cow quota for 100 cows for £250 per cow on 1 January 2012. There is an active market for suckler cow quotas, which must be owned to enable an application for subsidy income to be made. On 31 December 2012, the market value of the quota was £300 per cow.
(ii) On 1 April 2009, Main acquired an operator’s licence for a fleet of 20 heavy goods vehicles to set up a haulage division. Main had rented out several of its farm sheds to manufacturing companies and it had identified a further source of revenue by offering a haulage service to the tenants. The price paid for the licence, which is for five years, was £3,000 per vehicle. In addition to the initial price, Main spends £4,000 each year advertising the haulage division. Main received the invoice for the year ended 31 December 2012 from the advertising agency in January 2013.
(iii) On 1 July 2010, Main purchased for £28,000 shooting rights which entitle the company to seven years’
shooting on a nearby estate. The managing director uses this primarily for corporate entertaining. The rights are non-transferable during the seven-year period and therefore there is no active market.
(iv) During the year to 31 December 2012, Main began the development of a new type of organic crop spray. The costs incurred on this project in the year amounted to £40,000. The book-keeper, who was unsure how to classify this expenditure, has posted it to a suspense account. The research manager believes that the product will be both technically feasible and commercially viable. However, the product is still at an early stage and it is not certain how long it will be before it can be marketed.
Th (or) accounting policy of the company in respect of intangible assets is:
∎ intangible assets with an active market are revalued on an annual basis ∎ intangible assets are amortized on a straight line basis over 20 years or their estimated useful lives, whichever is the lower, on a monthly basis.
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(a) Explain how each of the items 1 to 4 should be dealt with in the accounts of Main for the year ended 31 December 2012, and prepare the journal entries required.

(b) Prepare the disclosure note in respect of ‘intangible assets’ for inclusion in Main’s financial statements for the year ended 31 December 2012.