Efil is large company operating in the taxi industry with a fiscal year ending on 31 December. On 31 December 2021, Efil acquired a five-year taxi licence for a price of 15,000 with the intention to use it for three years, after which the licence will be sold in the market for taxi licences. In this market, the fair value of the taxi licence is 9,000 on 31 December 2022 and 7,000 on 31 December 2023. In the same market, taxi licences with a remaining useful life of two years traded at a price of 3,000 on 31 December 2021 and do not change significantly in price in subsequent years.

Efil applies the straight-line amortisation method to all its intangible assets and the revaluation model according to IAS 38 to the taxi licences that it owns. The market for taxi licences qualifies as active market according to IAS 38 and is expected to continue to exist for the next years.

REQUIRED:

a) Calculate the relevant amounts and prepare the journal entries for the initial recognition and subsequent measurement of the taxi licence in Efils financial statements for fiscal years 2021, 2022 and 2023. Explain each of your steps.

b) Under the revaluation model according to IAS 38, revaluation increases and revaluation de- creases are to be treated differently and affect

measures of financial performance differently.

i) Explain the differences in the accounting treatment of revaluation increases and re- valuation decreases.

ii) Explain which summary measures from the financial statements the IASB considers as measures of financial performance.

iii) Based on your answers to i) and ii), discuss which measure of financial performance reflects the value development of assets measured under the revaluation model most comprehensively.