Question
EXHIBIT 1 Tasty has entered into an agreement with a separate entity, Dulce, under which Tasty will acquire a licence to use Dulces technology to
EXHIBIT 1 Tasty has entered into an agreement with a separate entity, Dulce, under which Tasty will acquire a licence to use Dulces technology to manufacture pasteurised dairy beverages. The technology has a fair value of $8 million. Tasty cannot use the technology to manufacture any other drinks. Tasty has not concluded the amount of economic benefits that are likely to flow from the dairy beverages, but will use Dulces technology for a period of 3 years. Tasty will have to keep updating the technology in accordance with Dulces requirements which is expected to cost $50 000 over the period of three years. The agreement stipulates that Tasty will make a non-refundable payment of $ 8 million to Dulce to acquire the licence to use Dulces technology immediately. Once the legal aspects have been completed, Tasty will be able to start manufacturing. a. Discuss how the agreement with Dulce should be dealt with in the financial statements of Tasty under IFRS standards.
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