QUESTION 1 - Principles and Concepts (8 Marks) Faced with financial difficulties, Ardmono (Aust) Pty Ltd (AAPL), an Australian company that manufactures the highly reputable Sunrace brand of bicycle accessories, decided to sell its business to a related company, Ardmono (Japan) Pty Ltd (AJPL). However, AJPL did not have sufficient funds to purchase the business outright and instead entered into a licence agreement on 1 July 2018 with AJPL that allowed AJPL to use AAPL's Sunrace trademark for 10 years in consideration for payment of an annual royalty. AAPL, however, still wanted to realise a lump sum. On 1 September 2018 it sold the rights under its licence agreement with AJPL for $4 million to Common Bank, an unrelated Australian financial institution. With reference to legislation and case law, advise AAPL whether the $4 million constitutes assessable income. Ignore any capital gains tax implications. Learning Guide B) All answers must be supported with references to relevant legislation, caselaw and/or tax rulings a. Your textbook is only a secondary source of information. Preferably, you should instead rely on primary sources (eg, actual sections in the legislation, reported cases, tax rulings, etc) QUESTION 1 - Principles and Concepts (8 Marks) Faced with financial difficulties, Ardmono (Aust) Pty Ltd (AAPL), an Australian company that manufactures the highly reputable Sunrace brand of bicycle accessories, decided to sell its business to a related company, Ardmono (Japan) Pty Ltd (AJPL). However, AJPL did not have sufficient funds to purchase the business outright and instead entered into a licence agreement on 1 July 2018 with AJPL that allowed AJPL to use AAPL's Sunrace trademark for 10 years in consideration for payment of an annual royalty. AAPL, however, still wanted to realise a lump sum. On 1 September 2018 it sold the rights under its licence agreement with AJPL for $4 million to Common Bank, an unrelated Australian financial institution. With reference to legislation and case law, advise AAPL whether the $4 million constitutes assessable income. Ignore any capital gains tax implications. Learning Guide B) All answers must be supported with references to relevant legislation, caselaw and/or tax rulings a. Your textbook is only a secondary source of information. Preferably, you should instead rely on primary sources (eg, actual sections in the legislation, reported cases, tax rulings, etc)