Question
(c) Jen Ride Ltd has purchased a number of taxi licences on 1 November 2020 for $30,000. The licences have an estimated life of 9
(c) Jen Ride Ltd has purchased a number of taxi licences on 1 November 2020 for $30,000. The licences have an estimated life of 9 years. These taxi licences can be traded in the market at any time and they had a fair value of $32,000 as at 30 June 2021. The accountant, George, is finalising financial statements for the year ended 30 June 2021 and he seeks your advice on the following questions. i) How would taxi licences be treated on 1 November 2020 in financial statements using the relevant accounting standard? ii) Would Jen Ride Ltd be permitted to revalue these taxi licences to fair value on 30 June 2021? Explain the criteria. iii) How would taxi licences be treated in the Statement of Financial Position at 30 June 2021 using the available options?
Advise Haley in providing answers to above three questions using the relevant rules from NZ IAS 38. Show all calculations. You are not required to prepare any journal entries.
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