RM28 million 8 Lavender, a public listed company, has asked your opinion on how the following matters should be dealt with: On 1 July, Lavender acquired Gingko Nuts, a pharmaceutical company that specialises in drug research and development. The purchase consideration was RM70 million through a share exchange. The net assets of Gingko Nuts is RM30 million, excluding items referred to a. below: i. Gingko Nuts owns a patent for an remaining life of four years. The carrying is nil. The fair value of the patent is estimated as RM20 million by a firm of branding specialists Zezo. Currently, the company is awaiting the outcome of clinical tests, and if the tests are successful, the fair value of the drug will be RM30 million. ii. Gingko Nuts carried out research for a client costing RM5 million. It had written off the cost. established drug that has amount of the patent a b. Lavender has developed and patented a drug which has been approved by the Health Ministry. The cost of developing the drug is RM12 million and the fair value is RM40 million. To date, the drug has not been manufactured for commercial use. c. Lavender received an exclusive special licence for five years to manufacture and sell vaccine for the HFM disease. The firm of specialists has valued the licence to have a fair value of RM6 million Lavender does not incur any cost to get the licence. d. Lavender spent RM10 million on personal coaching and workshops for its sales personnel. The sales revenue has increased tremendously as a result of the staff training Required: Explain how the above-mentionned matters should be dealt with by Lavender