Accounting for Australian Journal of Management - myassignmenthelp

Question: Discuss about theAccounting for Australian Journal of Management. Answer: The Para 21 of the NZ-IAS 138 provides that the Intangible assets are initially measured by an organization only if there is reasonable certainty that the use of intangible assets would resulted in inflow of economic benefits to the organization in the future (Low et al., 2015). In addition to this, the right to receive such economic benefit is firmly with the organization that means there is no reasonable uncertainty as to the ownership of intangible asset. The recognition criteria also includes that the cost of the assets should be measured reliably. The Para 24 of the standard provides that the intangible assets should be initially measured at cost (Edeigba Amenkhienan, 2017). Measurement of intangible assets certainly differs depending on whether the assets has been acquired separately or the asset has been acquired in a business combination or generated internally by an entity. In case the asset has been acquired separately then the intangible asset is measured as per the cost method, i.e. the payment made to acquire the intangible asset separately. In case of acquisition of intangible asset in a business combination then the intangible asset is measured by subtracting the net asset acquired in business combination from the amount of purchase consideration (Cahan, 2016). In case the intangible asset is generated internally by an entity then till the stage of development of the asset no expenditure incurred on generation of intangible asset shall be recognized as intangible asset. Thus, only the expenditures incurred in the development stage of the asset shall be considered to measure the intangible asset generated internally by an entity (Andr et al., 2018). According to the NZ IAS 38, until the recognition criterions of intangible assets are not satisfied the expenditures incurred for generation of intangible asset shall be expended. Thus, the expenditures, which are incurred after the satisfaction of recognition criterions in respect of intangible assets, shall be considered to measure the intangible asset (Contractor et al., 2016). In this case, it has been specifically said that Two Rocks Limited was convinced about the development of the product only at the end of April thus, all the expenditures incurred until the month of April 2017 from January 2017 shall be expended and subsequent expenditures incurred on development of the product shall be capitalized (Ahmed Haji Mohd Ghazali, 2018). Amount to be expended in the books of accounts (January, 2017 to April, 2017) Particulars Amount ($) Amount ($) Salaries paid to engineers of the company 145000 Amount spent for developing a new filter system 165000 Amount spent on revision of filtration process 135000 Total 445000 Amount to be capitalized as intangible assets in the books of accounts (May, 2017 to June, 2017) Particulars Amount ($) Amount ($) Cost incurred in May 65000 Cost incurred for marketing including foods and beverages 25000 Refining cost of filtration process 45000 Total 135000 Statement showing calculation of intangible Assets Particulars Amount ($) Amount ($) Acquired fibre division of Sand Hill Ltd. 330000 Less: Tangible assets acquired Equipment 180000 Inventories 60000 240000 The excess amount paid over and above the net tangible assets 90000 The excess amount to be segregated in: Amount to be recognized as Patent 50000 Amount to be recognized as brand name 40000 90000 Reference Ahmed Haji, A., Mohd Ghazali, N. A. (2018). The role of intangible assets and liabilities in firm performance: empirical evidence.Journal of Applied Accounting Research, (just-accepted), 00-00. Andr, P., Dionysiou, D., Tsalavoutas, I. (2018). Mandated disclosures under IAS 36 Impairment of Assets and IAS 38 Intangible Assets: value relevance and impact on analysts forecasts.Applied Economics,50(7), 707-725. Benson, K., Clarkson, P. M., Smith, T., Tutticci, I. (2015). A review of accounting research in the Asia Pacific region.Australian Journal of Management,40(1), 36-88. Biondi, L., Lapsley, I. (2014). Accounting, transparency and governance: the heritage assets problem.Qualitative Research in Accounting Management,11(2), 146-164. Cahan, S. (2016). Consequences of IFRS for capital markets, managers, auditors and standard?setters: an introduction.Accounting Finance,56(1), 5-8. Contractor, F., Yang, Y., Gaur, A. S. (2016). Firm-specific intangible assets and subsidiary profitability: The moderating role of distance, ownership strategy and subsidiary experience.Journal of World Business,51(6), 950-964. Edeigba, J., Amenkhienan, F. (2017). The Influence of IFRS Adoption on Corporate Transparency and Accountability: Evidence from New Zealand.Australasian Accounting, Business and Finance Journal,11(3), 3-19. Low, M., Samkin, G., Li, Y. (2015). Voluntary reporting of intellectual capital: comparing the quality of disclosures from New Zealand, Australian and United Kingdom universities.Journal of Intellectual Capital,16(4), 779-808.