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Hi, the question says (5th line) “Chemclean has not concluded that economic benefits are likely to flow from this compound”
IAS 38 says “Recognition – the cost of the asset can be measured reliably,
and
It is probable that future economic benefits that are attributable to the asset will flow to the entity.
The examiner’s answer says “Chemclean should recognise an intangible asset for the use of Jonmaster’s technology”
The question is, why is the know how and technology being recorded as an intangible asset when both conditions are not met, ie probable future economic benefits…
Thanks
Hi,
The key here is that we, Chemclean, are not doing the research ourselves but are paying Jomaster to do it for us, so in effect we are acquiring separately an intangible. Any resulting knowledge gained from Jomaster is therefore capitalised as it has a reliable measurement given that we are paying $4 million and we will get any benefits if it is subsequently able to be used.
Thanks
Hi Admin, related to this question, how can we conclude that using this license will bring future economic benefit to Chemclean, especially when Chemclean has not been confident theirself about future economic benefit of this license?
Any risk of CANNOT USE/SELL CHEMICAL COMPOUND IN THE FUTURE with the basis of information available, leading to the result of no future economic benefit will flow to the entity.
Dear Admin, please help explain to me for further discussion about this question.
Thank you so much.
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