a) On 1 January 2019, JY Bhd acquired a franchise for RM300,000 cash. The economic life of the franchise was estimated at 10 years. The company adopts the revaluation model. The fair value of the franchise on 31 December 2019 was RM252,000. Its fair value on 31 December 2020 was RM274,000.

Required:

Prepare journal entries to record the intangible asset for year 2019 and year 2020. (8 marks)

b) PS Bhd started developing a new production process on 17 February 2020. The project met the criteria for recognition as an intangible asset on 1 July 2020. The project was completed on 30 November 2020. Development expenditure of RM90,000 was incurred in the project. RM42,000 of the expenditure was incurred before 1 July 2020 and the balance was incurred from July to November 2020.

Required:

Explain the accounting treatment of the development expenditure.