Cinceptual Framework Skirer is a pharmaceutical company which develops new products with other pharmaceutical companies that have the appropriate production facilities. Stakes in development projects When Skiser acquires a stake in a development project, it makes an initial payment to the other pharmaceutical company. It then makes a series of further stage payments until the product development is complete and it has been approved by the authorities in the financial statements for the year ended 31 August 20x87, Skizer has treated the different stakes in the development projects as separate intarpble assets because of the anticipated future economic benefits related to Skizer's ownership of the product rights. However, in the year to August 2006, the directors of Skiver decided that all such intangible assets were to be expensed as research and development costs as they were ungure as to whether the payments should have been initially recognised as intangible assets. This write of was to be treated as a change in an accounting estimate. Sale of development project On 1 September 2006, Skicer acquired a development project as part of a business combination and correctly recognised the project as an intangible asset. However, in the financial statements to 31 August 2017, Skiser recognised an impairment loss for the full amount of the intangible asset because of the uncertainties surrounding the completion of the project. During the year ended 31 August 20x, the directors of Skirejudged that it could not complete the project on its own and could not find a suitable entity to jointly develop it. Thus, Skiver decided to sell the project, including all rights to future development. Skeer succeeded in selling the project and, as the project had a nl carrying value, it treated the sale proceeds as revenue in the financial statements The directors of Skizer argued that IFRS 15 Revenue from Contracts with Customers states that revenue should be recognised when control is passed at a point in time. The directors of Skier argued that the sale of the rights was part of their business model and that control of the project had passed to the purchaser Required: Explain the criteria in both the 2010 version of the Conceptual Framework for Financial Reporting the conceptual framework) of the International Accounting Standards board and the 2015 proposed revision to the conceptual Framework for the recognition of an asset and whether the criteria are the same in LAS 3 intang ble Assets. (6 marks) Discuss the implications for Salzer's financial statements for both the years ended 31 August 2007 and 20x8the recognition criteria in IAS 38 for an intangible asset were met as regards the stakes in the development projects above. Your answer should also briefly consider the implications if the recognition criteria were not met. (marks! 04 Discuss whether the proceeds of the sale of the development project above should be treated as reven in the financial statements for the year ended 31 August 20x8 External daclosure of information on intangibles is useful only insofar as it is understood and is relevant to investors. It appears that investors are increasingly interested in and understand disclosures relating to intangibles. A concern is that, due to the nature of disclosure requirements of IFRS Standards Investors may feel that the information disclosed has limited usefulness, thereby making comparisons between companies difficult. Many companies spend a huge amount of capital on intangle investment, which is mainly developed within the company and thus may not be reported. Often, it is not obvious that intangibles can be valued or even separately identified for accounting purposes. The Integrated Reporting Framework may be one way to solve this problem Required 00 Discuss the potential which investors may have with accounting for the different types of intangible et acquired in a business combination the choice of accounting policy of cost or evaluation models, allowed under IAS 38 intangible Assets for intangible assets, the capitalisation of development expenditure marks) Discuss whether integrated reporting can enhance the current reporting requirements for intangible assets Cinceptual Framework Skirer is a pharmaceutical company which develops new products with other pharmaceutical companies that have the appropriate production facilities. Stakes in development projects When Skiser acquires a stake in a development project, it makes an initial payment to the other pharmaceutical company. It then makes a series of further stage payments until the product development is complete and it has been approved by the authorities in the financial statements for the year ended 31 August 20x87, Skizer has treated the different stakes in the development projects as separate intarpble assets because of the anticipated future economic benefits related to Skizer's ownership of the product rights. However, in the year to August 2006, the directors of Skiver decided that all such intangible assets were to be expensed as research and development costs as they were ungure as to whether the payments should have been initially recognised as intangible assets. This write of was to be treated as a change in an accounting estimate. Sale of development project On 1 September 2006, Skicer acquired a development project as part of a business combination and correctly recognised the project as an intangible asset. However, in the financial statements to 31 August 2017, Skiser recognised an impairment loss for the full amount of the intangible asset because of the uncertainties surrounding the completion of the project. During the year ended 31 August 20x, the directors of Skirejudged that it could not complete the project on its own and could not find a suitable entity to jointly develop it. Thus, Skiver decided to sell the project, including all rights to future development. Skeer succeeded in selling the project and, as the project had a nl carrying value, it treated the sale proceeds as revenue in the financial statements The directors of Skizer argued that IFRS 15 Revenue from Contracts with Customers states that revenue should be recognised when control is passed at a point in time. The directors of Skier argued that the sale of the rights was part of their business model and that control of the project had passed to the purchaser Required: Explain the criteria in both the 2010 version of the Conceptual Framework for Financial Reporting the conceptual framework) of the International Accounting Standards board and the 2015 proposed revision to the conceptual Framework for the recognition of an asset and whether the criteria are the same in LAS 3 intang ble Assets. (6 marks) Discuss the implications for Salzer's financial statements for both the years ended 31 August 2007 and 20x8the recognition criteria in IAS 38 for an intangible asset were met as regards the stakes in the development projects above. Your answer should also briefly consider the implications if the recognition criteria were not met. (marks! 04 Discuss whether the proceeds of the sale of the development project above should be treated as reven in the financial statements for the year ended 31 August 20x8 External daclosure of information on intangibles is useful only insofar as it is understood and is relevant to investors. It appears that investors are increasingly interested in and understand disclosures relating to intangibles. A concern is that, due to the nature of disclosure requirements of IFRS Standards Investors may feel that the information disclosed has limited usefulness, thereby making comparisons between companies difficult. Many companies spend a huge amount of capital on intangle investment, which is mainly developed within the company and thus may not be reported. Often, it is not obvious that intangibles can be valued or even separately identified for accounting purposes. The Integrated Reporting Framework may be one way to solve this problem Required 00 Discuss the potential which investors may have with accounting for the different types of intangible et acquired in a business combination the choice of accounting policy of cost or evaluation models, allowed under IAS 38 intangible Assets for intangible assets, the capitalisation of development expenditure marks) Discuss whether integrated reporting can enhance the current reporting requirements for intangible assets