Question 1 How should the following intangible assets be treated in the financial statements? A publishing title acquired as part of a subsidiary company. A license purchased in order to market a new product.

Question 2 An entity has incurred the following expenditure during the current year: (a) $100,000 spent on the initial design work of a new product it is anticipated that this design will be taken forward over the next two-year period to be developed and tested with a view to production in three years' time. (b) $500,000 was spent on the testing of a new production system that has been designed internally and will be in operation during the following accounting year. This new system should reduce the costs of production by 20%. How should each of these costs be treated in the financial statements of the entity?

Question 3 An entity has incurred the following expenditure during the current year: (i) A brand name relating to a specific range of chocolate bars, purchased for $200,000. By the years-end, a brand specialist had valued this at $250,000. (ii) $500,000 spent on developing a new line of confectionery, including $150,000 spent on researching the product before management gave approval to fully fund the project. (iii) Training costs for staff to use a new manufacturing process. The total training costs amounted to $100,000 and staff is expected to remain for an average of 5 years. Explain the accounting treatment for the above issues.

Question 4 Improve has deferred development expenditure of $600,000 relating to the development of New Miracle Brand X. It is expected that the demand for the product will stay at a high level for the next three years. Annual sales of 400,000, 300,000 and 200,000 units respectively are expected over this period. Brand X sells for $10. How should the development expenditure be amortized?