Question twelve

Clasibuk Uganda Ltd (CUL) deals in stationery and printing services. On 1 January, 2016 CUL acquired a copyright for Shs 70million to print and sell M book textbooks. Analysis done on the same date about the consumer habits and trends, provided evidence that the copyrighted material would generate net cash flows for only 20 years despite the copyrights legal life of 25years. On 31 December, 2017, the management of CUL tested the copyright for impairment and its fair value was Shs 55 million.

Required:

(a) Explain the term intangible asset in accordance with IAS 38:Intangible Assets. (2 mark)

(b) Discuss the criteria for recognition of intangible assets in the financial statements of CUL and indicate the basis of subsequent measurement in accordance with IAS 38. (12marks)

(c) Explain how the above transaction should be recorded in the books of CUL for the year ended 31 December , 2017. (6 mark)