Duchamp plc is a company that publishes regional newspapers. Each newspaper contains news relevant to a specific town or city.

On 1^st July 2019 Duchamp plc purchased the Winchester Weekly Bulletin title from a competitor. This title was launched in 1934 and is still popular. The title cost Duchamp 350,000.

The CEO of Duchamp plc felt it was inconsistent to have one title recognised on the Statement of financial position when other titles that were created in-house by Duchamp were not capitalised. He has requested the Finance Director work out the expenditure on these in-house titles and capitalise it along with the Winchester Weekly Bulletin.

The only other title purchased by Duchamp plc is the Cambridge Evening Mercury for which it paid 100,000 five years ago. Since then circulation has doubled and the CEO feels the magazine must consequently be worth at least twice as much. He has suggested the title is revalued to reflect this.

On 1^st October 2019 the company began developing some new software that, if successful, would reduce the cost of producing the newspapers. The initial design work proceeded quickly but building the new software has proved difficult due to lack of compatibility between the different systems. Development costs at 30^th June 2020 had reached 65,000 and the board are questioning whether it is worth investing further in what might be a failing project when similar packages could be bought off the shelf.

Requirement

1. Discuss how the purchase of the Winchester Weekly Bulletin should be treated in the financial statements including how it should be measured subsequently. (3 marks)

2. Explain whether the CEOs ideas with respect to the in-house titles and the Cambridge Evening Mercury are acceptable. (3 marks)

3. Explain whether the costs incurred in the process of developing the new software can be capitalised as at 30^th June 2020. (You are not required to repeat all the PIRATE criteria). (4 marks)