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Hello Sir
I hope you are doing good.
I have two questions regarding IAS 38
I was reading f7 bpp book and there is something which i couldnt understand at all from intangible chapter in Recognition of an expense topicPrepaid costs for services, for example advertising or marketing costs for campaigns that have been prepared but not launched, can still be recognised as a prepayment.
please kindly explain me what they are trying to say as i am self studying and my english is not that good.
2nd Question
Q.when a parent is evaluating the assets of the potential subsidiary,certain Intangible assets can be recognized separately from goodwill,even though they have not been recognized in the subsidiary’s own statement of financial position.which of the following is an example of an intangible asset of the subsidiary which may be recognized separately from goodwill when preparing consolidated financial statements?
A.a new research project which the subsidiary has correctly expensed to profit or loss but the directors of the parent have reliably assessed to have a substantial fair value
B.a global advertising campaign which was concluded in the previous financial year and from which benefits are expected to flow in the future.
C.a contingent asset of the subsidiary from which the parent believes a flow of future economic benefits is possible
D.a customer list which the directors are unable to value reliably.Correct Answer is A
i know the D cant be the answer because from what i have read from the book that customer list is indistinguishable from the goodwill but isnt it a purchased intangible asset ? and for A i thought that would be a research cost as they have already expensed it so why A is actually a correct and C is IAS 37 so it cant be IAS 38
i thought the answer would be B
Thank you Sir in advance and I would really appreciate your support and effort.
1) “Prepaid costs for services, for example advertising or marketing costs for campaigns that have been prepared but not launched, can still be recognised as a prepayment.”
The costs involved in preparing advertising for a product or service that is to be launched next year is treated as a prepayment
2) The advertising campaign in this question differs from the campaign in part 1) of your post because the campaign here HAS been launched whereas in part 1) the campaign had been prepared but not yet launched
That cost involved in the research project is an unusual issue but it’s the equivalent of any unrecognised intangible asset.
Tricky question
Thank you Sir so much for your help and prompt reply.I am so happy that you made me understand the whole question in just a second.May God Bless you always
Have a good day 🙂
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