Question 2 IAS 38 establishes standards in relation to the recognition and initial measurement of intangible assets.
Question:
Question 2
IAS 38 establishes standards in relation to the recognition and initial measurement of intangible assets. Consequently, IAS 38 analyses intangibles in terms of four ways in which an entity could have obtained the assets, these are: separate acquisition, acquisition as part of business acquisition, acquisition by way of government grant and internally generated assets.
Required
Discuss
How intangible assets are initially measured, and
(10 marks)
Whether the measurement differs depending on whether the assets are acquired in a business combination or internally generated by an entity. Use examples from the provided set of accounts to support your argument.
(7 marks for discussing each of the two methods and 6 marks for highlighting the differences to a total of 20 marks)
(Total 30 marks)
Question 3
A key step in the analysis of financial statements is an evaluation of the degree to which a firms accounting captures its underlying performance.
Required
Explain what is meant by Earnings Quality.
(6 marks)
Critically discuss the factors which influence the quality of accounting information of a business and managerial incentives to manage earnings.
(4 marks for each valid factor, and 4 marks for each valid managerial incentive to a maximum of 24 marks)
(Total 30 marks)
Based on Next annual report 2016