Sun Ltd owns several fishing licences for its Charter Boats purposes that have a 10-year life of which six years remain. These licences are currently being carried at a book value of $3,000,000 (being Cost $5,000,000less Accumulated Amortisation $2,000,000). The licences can be traded in an active market and have a fair value of $4,000,000.

Requirement

How should the licences be reported in accordance with AASB 138 Intangible Assets. Your answer should include the carrying amount and whether the licences can be amortised. (Specify any choices of methodpermitted for Sun Ltd)