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this financial reporting I need help please You were interviewed for the position of Financial Manager at Runway Limited. During the interview, the panel mentioned
this financial reporting I need help please
You were interviewed for the position of Financial Manager at Runway Limited. During the interview, the panel mentioned that intangible assets are an important aspect of the company. It is therefore not surprising that as part of the interview process, you were presented with the following hypothetical expenses: 1. R120 000 was spent to generate a trademark internally. The expectation is that the benefits associated with the trademark will be received over a period of 7 years. The Financial Manager, therefore, wants to capitalise the R50 000 and amortise it over 5 years. 2. A new product for which several prototypes were developed during the current financial year. The prototypes were developed at the cost of R215 000. Runway Limited still needs to choose between these prototypes, which they expect to have finalised early in the new financial year. 3. Advertising costs to the value of R67 000 were incurred during the year. The purpose of the advertising was to introduce the new product that Runway Limited is developing. The company estimates that the demand for this new product will last for at least the next 5 years, and the economic benefits will flow to Runway Limited over the 5 years. Therefore, the Financial Manager wants to capitalise the advertising costs and then amortise it over the 5 years. REQUIRED: Your task is to, separately for each of the above cases, advise the interview panel of Runway Limited whether the relevant costs may be capitalised in accordance with the requirements of IAS 38: Intangible assetsStep by Step Solution
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