QUESTION 03 15 MARKS (a) NZ IAS 38 provides different reporting requirements for intangible assets as compared to the reporting requirements for PPE provided by NZ IAS 16. Why do you think that it is necessary to have different accounting rules for Intangible assets from Tangible assets? Briefly explain four possible reasons why it is necessary to have different accounting rules for intangible assets as compared to PPE assets. (4 marks) (b) Tasty Food Mart Ltd reports following intangible assets as at 31 March 2020. i) The company has developed its brand name to the point where it is a valuable asset. It. would appear that if it were to sell the brand name it would receive at least $22,000 for it. (2 marks) ii) The company has acquired patents on 1 January 2017 for $12,000. Patents have an estimated life of 15 years. (4 marks) iii) On 1 April 2018, the company acquired a franchise -Yummy Ice cream for $10,500 for 7 years. There is great demand for this franchise in the current market. The current market price for such a franchise is $13,000. (5 marks) Required: State, with reasons, whether each item should be recognised and if so how they should be measured in accordance with NZ IAS 38 as at 31 March 2020. Round all amounts to the nearest dollar. QUESTION 03 15 MARKS (a) NZ IAS 38 provides different reporting requirements for intangible assets as compared to the reporting requirements for PPE provided by NZ IAS 16. Why do you think that it is necessary to have different accounting rules for Intangible assets from Tangible assets? Briefly explain four possible reasons why it is necessary to have different accounting rules for intangible assets as compared to PPE assets. (4 marks) (b) Tasty Food Mart Ltd reports following intangible assets as at 31 March 2020. The company has developed its brand name to the point where it is a valuable asset. It would appear. that if it were to sell the brand name it would receive at least $22,000 for it. (2 marks) 1) The company has acquired patents on 1 January 2017 for $12,000. Patents have an estimated life of 15 years. (4 marks) 1) On 1 April 2018, the company acquired a franchise -Yummy ice cream for $10,500 for 7 years. There is great demand for this franchise in the current market. The current market price for such a franchise is $13,000 15 marks) Required: State, with reasons, whether each item should be recognised and if so how they should be measured in accordance with NZ IAS 38 as at 31 March 2020 Round all amounts to the nearest dollar. QUESTION 03 15 MARKS (a) NZ IAS 38 provides different reporting requirements for intangible assets as compared to the reporting requirements for PPE provided by NZ IAS 16. Why do you think that it is necessary to have different accounting rules for Intangible assets from Tangible assets? Briefly explain four possible reasons why it is necessary to have different accounting rules for intangible assets as compared to PPE assets. (4 marks) (b) Tasty Food Mart Ltd reports following intangible assets as at 31 March 2020. i) The company has developed its brand name to the point where it is a valuable asset. It. would appear that if it were to sell the brand name it would receive at least $22,000 for it. (2 marks) ii) The company has acquired patents on 1 January 2017 for $12,000. Patents have an estimated life of 15 years. (4 marks) iii) On 1 April 2018, the company acquired a franchise -Yummy Ice cream for $10,500 for 7 years. There is great demand for this franchise in the current market. The current market price for such a franchise is $13,000. (5 marks) Required: State, with reasons, whether each item should be recognised and if so how they should be measured in accordance with NZ IAS 38 as at 31 March 2020. Round all amounts to the nearest dollar. QUESTION 03 15 MARKS (a) NZ IAS 38 provides different reporting requirements for intangible assets as compared to the reporting requirements for PPE provided by NZ IAS 16. Why do you think that it is necessary to have different accounting rules for Intangible assets from Tangible assets? Briefly explain four possible reasons why it is necessary to have different accounting rules for intangible assets as compared to PPE assets. (4 marks) (b) Tasty Food Mart Ltd reports following intangible assets as at 31 March 2020. The company has developed its brand name to the point where it is a valuable asset. It would appear. that if it were to sell the brand name it would receive at least $22,000 for it. (2 marks) 1) The company has acquired patents on 1 January 2017 for $12,000. Patents have an estimated life of 15 years. (4 marks) 1) On 1 April 2018, the company acquired a franchise -Yummy ice cream for $10,500 for 7 years. There is great demand for this franchise in the current market. The current market price for such a franchise is $13,000 15 marks) Required: State, with reasons, whether each item should be recognised and if so how they should be measured in accordance with NZ IAS 38 as at 31 March 2020 Round all amounts to the nearest dollar
