1. Bears Limited has the following queries relating to the assets and liabilities on its statement of financial position for the year ended 31 December 2019:

1. The company has developed a branded perfume. The directors would like to recognize this brand as an asset on the company’s statement of financial position but they are unsure of the monetary value that they should give to the brand. The sales of the branded perfume over the past year were £1,500,000 and the directors expect the sales to rise by £500,000 each year for the foreseeable future.

Required:

Draft notes for a meeting with the directors to explain whether the brand can be recognized as a non-current asset on the company’s statement of financial position or not.

2. Bears Limited’s non-current assets require major repairs. The directors have not yet taken the decision to undertake these repairs and the total cost of the repairs has not yet been determined. The directors would like to recognize a liability for these repairs on the company’s statement of financial position but they are not sure they can do so as they do not have an exact figure for the cost of the repairs.

Required:

Draft notes for a meeting with the directors to explain whether the repairs can be recognized as a liability on the company’s statement of financial position or not.