IAS 38 - Intangible Assets
Posted: 13 Mar 2024, 17:05
Hello Community,
Would like to seek your advice on the following:
1. Company A entered into license agreement with Company B, whereby Company A can use the IP/know-how of Company B by paying Company B a fee (stated in the agreement), from the effective date. Per the agreement, Company A has to pay Company B a lump sum of $5k and further sum of $10k to be paid in 5 annual installments. Effective date of the agreement is in Dec 2022.
In Dec 2022. Company A has received an $5k invoice from Company B.
Question:
Should Company A capitalised $15k as intangible assets in FY22 upon signing the agreement i.e. accrue the remaining $10k that are to be billed in 5 annual installments? Or Company A should capitalise $5k as intangible assets in FY22 and capitalise the remaining cost upon receiving the invoice?
2. Company A manufactures product A for sale. In FY22, the Company A unable to sell the product and it has written down the value to zero. However, in FY23, Company A has decided to make use of product A as internal use, the product A has a secondhand value of $2k but the Company has also determined the value of $8k using DCF model.
Question:
How should we record the double entries on the above?
Many thanks in advance!
Would like to seek your advice on the following:
1. Company A entered into license agreement with Company B, whereby Company A can use the IP/know-how of Company B by paying Company B a fee (stated in the agreement), from the effective date. Per the agreement, Company A has to pay Company B a lump sum of $5k and further sum of $10k to be paid in 5 annual installments. Effective date of the agreement is in Dec 2022.
In Dec 2022. Company A has received an $5k invoice from Company B.
Question:
Should Company A capitalised $15k as intangible assets in FY22 upon signing the agreement i.e. accrue the remaining $10k that are to be billed in 5 annual installments? Or Company A should capitalise $5k as intangible assets in FY22 and capitalise the remaining cost upon receiving the invoice?
2. Company A manufactures product A for sale. In FY22, the Company A unable to sell the product and it has written down the value to zero. However, in FY23, Company A has decided to make use of product A as internal use, the product A has a secondhand value of $2k but the Company has also determined the value of $8k using DCF model.
Question:
How should we record the double entries on the above?
Many thanks in advance!