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Can someone please help in why they only include Developement cost of $4m and the $8m for project and not the $2m and further $1m .
Thanks a million
Hey lizzie,
I came on here to ask the same question. Could it be because it is a sunk cost?
Also, do you know where the rights issue in part 2 of $5m has been used?
And, in working 6 where the derecognition amount of $5m has come from?
Thanks
Soph. I now the Rights issue has something to do with just recognising the NCI apportion of the Rights issue.
That question is highly complex and you have highlighted all the tough points, but do remember if you leave those out you are probably only loosing half a mark per point.
@lizzie said:
Can someone please help in why they only include Developement cost of $4m and the $8m for project and not the $2m and further $1m .Well from question we can assume that research project will be used more than 1 year and that we will be able to finish research phase. Development of new product i think is always capitalised. Additional expenses for research 2m goes to profit and loss as expense because it is expense not an improvement to current asset but only maintenance. Marketing, advertising costs are all the same thing and are expensed. Hope it helped a little.
I came on here to ask the same question. Could it be because it is a sunk cost?
Also, do you know where the rights issue in part 2 of $5m has been used?
And, in working 6 where the derecognition amount of $5m has come from?
Thanks
what did you mean by derecognition of 5m? I do not see it on working 6. Is it PPE?
Dear Lizzie,
They have not included the £2 million and £1 million because these are the cost of the reseach to complete the project and £1 million is the marketing cost in order to sell the product in the market. So £2 million will considered as reseach expenses and will be charge against the group profit or loss account, and £1 million as marketing cost will be charge to the profit or loss account as expense. So £2 and £1 million can not be considered as intangible assets. these are the costs to complete the project (uncomplete) acquired from Tigret. so £8 +4 can be considered as intangible assets in the group Non current Assets.can anyone explain why the deferred tax liability of $1.5 million has been added on to the workings when calculating goodwill. it is a deffered tax liability right?
many thanks.
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@topoftherock said:
can anyone explain why the deferred tax liability of $1.5 million has been added on to the workings when calculating goodwill. it is a deffered tax liability right?many thanks.
The fair value of the net assets is $45 milion, but the tax base is $40 million. Therefore there is a taxable temporary difference of $5 million, which is multiplied by the tax rate of 30% to give a DT liability of $1.5 million.
This is deducted from net assets when calculating goodwill, and appears as a liability in its own right in the group SFP.
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