Financial Accounting and Reporting 2: Intangible Assets (All the information are stated in the questions below. No missing data, graph, link or other material.)

QUESTION 1

At the end of 2016, Green Energy Bhd successfully developed a green and sustainable engine, which is called CCO5 engine that runs on extract from coconut oil. In order to protect the technology of the engine, the company acquired a patent at a cost of RM600,000 on 1 January 2017. The legal life of the patent is six years while the economic useful life of the patent is five years.On 31 December 2017, due to adverse press reports on the new technology, the patent was deemed to have a recoverable amount of RM440,000. The recoverable amount of the patent was RM350,000 on 31 December 2018.

Meanwhile, as part of its diversification strategy, on 1 January 2018, Green Energy Bhd acquired a small and medium technology company, ZTECH Sdn Bhd. Green Energy Bhd paid RM2,350,000 to acquire all of the ordinary shares of the ZTECH Sdn Bhd. This company was then became a division (cash generating unit) of Green Energy Bhd. It was determined that at the date of the purchase the fair value of the identifiable net assets of ZTECH Sdn Bhd was RM2,100,000. Over the next 10 months of the operations, the newly purchased division experienced operating losses. In addition, it was appeared that it will generate substantial losses for the foreseeable future. At 31 December 2018, ZTECH division reported the following in statement of financial position: