Alpha prepares financial statements to 30 September each year. During the year ended 30 September 2020 Alpha (which has a number of subsidiaries) engaged in the following transactions: (a) On 1 April 2020, Alpha purchased all the equity capital of Delta and Delta became a subsidiary from that date. Delta sells a branded product that has a well-known name and the directors of Alpha have obtained evidence that the fair value of this name is Rs 20 million and that it has a useful economic life that is expected to be indefinite. The value of the brand name is not included in the statement of financial position of Delta as the directors of Delta do not consider that it satisfies the recognition criteria of IAS 38 for internally developed intangible assets. However, the directors of Delta have taken legal steps to ensure that no other entities can use the brand name. (6 marks) (b) On 1 October 2018 Alpha began a project that sought to develop a more efficient method of organising its production. Costs of Rs 10 million were incurred in the year to 30 September 2019 and debited to the statement of comprehensive income in that year. In the current year the results of the project were extremely encouraging and on 1 April 2020 the directors of Alpha were able to demonstrate that the project would generate substantial economic benefits for the group from 31 March 2021 onwards as its technical feasibility and commercial viability were clearly evident. Throughout the year to 30 September 2020 Alpha spent Rs 500,000 per month on the project.

Required Explain how both of the above transactions should be recognised in the financial statements of Alpha for the year ending 30 September 2020. You should quantify the amounts recognised and make reference to relevant provisions of IAS 38 Intangible Assets - wherever possible.

PART A

An assistant of yours has been criticised over a piece of assessed work that he produced for his study course for giving the definition of a non-current asset as 'a physical asset of substantial cost, owned by the co. which will last longer than one year. Required Provide an explanation to your assistant of the weaknesses in his definition of non-current assets when compared to the International Accounting Standards Board's (IASB) view of assets.

PART B

The same assistant has encountered the following matters during the preparation of the draft financial statements of Accenture for the year ending 30 September 2020. He has given an explanation of his treatment of them: (i) Accenture spent $200,000 sending its staff on training courses during the year. This has already led to an improvement in the company's efficiency and resulted in cost savings. The organiser of the course has stated that the benefits from the training should last for a minimum of four years. The assistant has therefore treated the cost of the training as an intangible asset and charged six months' amortisation based on the average date during the year on which the training courses were completed

(ii) During the year the company started research work with a view to the eventual development of a new processor chip. By 30 September 2020 it had spent $1.6 million on this project. Accenture has a past history of being particularly successful in bringing similar projects to a profitable conclusion. As a consequence the assistant has treated the expenditure to date on this project as an asset in the statement of F. position. Accenture was also commissioned by a customer to research and, if feasible, produce a computer system to install in motor vehicles that can automatically stop the vehicle if it is about to be involved in a collision. At 30 September 2020, Accenture had spent $2.4 million on this project, but at this date it was uncertain as to whether the project would be successful. As a consequence the assistant has treated the $2.4 million as an expense in the statement of profit or loss. (6 Marks)

Required For each of the above items comment on the assistant's treatment of them in the financial statements for the year ended 30 September 2020 and advise him how they should be treated under International Financial Reporting Standards.