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QUESTION 2 Cookies Munch Berhad is a company that manufactures and sell cookies in Kuala Lumpur. On 1 January 2015, the company acquired a patent
QUESTION 2 Cookies Munch Berhad is a company that manufactures and sell cookies in Kuala Lumpur. On 1 January 2015, the company acquired a patent for RM2,400,000 to manufacture and sell "Bitesit Cookies for local market. "Biteslt" cookies is a cookie that made from chocolate and nut paste from European style. The expected economic life of the patent is 5 years. As at 31 December 2016, the fair value of the patent was RM1,600,000. As at 31 December 2017, the fair value of the patent of Cookies Much Bhd was RM800,000. In the year of 2018, there was a company Airel Cookies Bhd, manufactures and sell cookies named "Caramello" which uses locally produced cocoa powder ingredients for their cookies. On 1 July 2018, a sufficient evidence was provided by a group of marketing analysts that "Caramello" would give adverse effect to the selling of "Bitesit" in Malaysia. As a result of this effect, Cookies Much Berhad expected that as at 31 December 2018, there would be a decline in the value in use of the patent to RM350,000 and the fair value less cost to sell to be RM250,000. The company adopts revaluation model for subsequent measurement of its intangible assets. Required: a. Explain the accounting treatment of the patent for the year ended 31 December 2015 and 31 December 2016. (10 marks) b. Prepare the Statement of Profit or Loss (extract) for the year ended 31 December 2017 and the Statement of Financial Position (extract) as at 31 December 2017 (5 marks) C. Calculate the impairment loss (if any) as at 31 December 2018. (5 marks) (Total 20 marks)
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