Bobby Ltd acquired the following assets (defined as a business) from Sponge Ltd: Accounts receivable (Carrying amount: $15,000; Fair Value: $14,000), Equipment (Carrying amount: $90,000; Fair Value: $80,000) and Brand "Square-Dress" (Carrying amount: $25,000; Fair Value: $40,000). Sponge Ltd had started a project to develop a new formula for a water proof coating to apply to dress fabric. To date Sponge Ltd had incurred $20,000 in costs for research and early development stage, recording the costs as expenses. Bobby Ltd was also acquiring the 'work-in-process' project as part of the business acquisition. An independent valuation determined the 'work-in-process' project to have a fair value of $18,000.

Bobby Ltd paid $170,000 in cash to acquire the business of Sponge Ltd.

According to AASB138 Intangibles Bobby Ltd must initially record the Brand "Square-Dress" at:

Select one:

a.

a proportion of the $170,000 cost of the business acquisition.

b.

zero value as it can never be recognised.

c.

cost of $25,000.

d.

fair value of $40,000.