Question 1

Trinity Medical Laboratory Ltd (TMLL) a medical research entity, has discovered a cure for a previously incurable disease. TMLL is protecting the drugs formula by keeping it secure in the company vault, rather than by patenting it. TMLL shortly plans to start discussions with vitally interested pharmaceutical companies about producing the drug for commercial sale. Being the first of its kind and, therefore, unique, TMLL has no idea as to the formulas value. Costs incurred to date in developing the formula are impossible to identify, given that the cure was discovered as a by-product of another research project. Advise the accountant if an asset exists. (5 marks)