$3\mathrm{.}3$ The recognition and revaluation of intangibles

On November $1,2019,$ Oman Air purchases landing rights, for the amount of $100$ million, in

one of the auctions that are regularly organized by BAA $($British Airports Authority$),$ the owner

of Heathrow airport. These landing rights provide Oman Air the opportunity to land at and take

off from London Heathrow airport during two pre$-$specified time intervals on a daily basis,

during a four$-$year period starting on January $1,2020,$ and ending on December $31,2023.$ To

reduce the overutilization of the airport, Heathrow$/$BAA distributes departure and landing slots

among the airlines using auctions. On December $31,2019,$ Oman Air pays for the landing

rights.

Serving the international route between London and Oman $($Muscat$)$ is Oman Air's only

activity. Currently, Oman Air would be the only airline that offers direct connections between

London and Oman. However, the CEO and CFO of Oman Air expect that competition will

increase during the coming years.

Is it allowed under IFRS to recognize the landing rights as an intangible asset on Oman

Air's balance sheet? Make sure to address issues such as 'identifiability' and 'control.$\text{'}$

What amount should be capitalized, and which amortization method would you consider

most appropriate?

On December $31,2020,$ the BAA auctions similar landing rights $($for a three$-$year

period$)$ for the amount of $120$ million. Does IFRS allow Oman Air to revalue its

landing rights because of this new information? How would your answer change if

Oman Air would have estimated the value in use to be equal to $130$ million?

What are the journal entries Oman Air has to prepare in $2020$ and $2021$ if it chooses to

revalue the landing rights?