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Intangible asset in CSFP

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Intangible asset in CSFP

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • May 3, 2017 at 12:34 pm #384560
    kengara
    Member
    • Topics: 197
    • Replies: 107
    • ☆☆☆

    Hi Mr Mike I have a question relating Intangible asset in consolidation

    The question has been taken from Becker revision question kit page number 115

    Salva owns the registration of a popular internet domain name.the registration, which had a negligible cost, has a five year remaining life (at the date of acquisition):however, it is renewable indefinitely at a nominal cost.At the date of acquisition the domain name was valued by a specialist company at 20$ million

    When i solved this question i recognized it in the following way

    accounting year from 1 october 2015 to 30 September 2016
    Pandra acquired salva on 1 april 2016
    Ad
    20000
    DR
    20000-(2000)
    depreciation(20000/5*6/12)
    post acquisition period -(2000)

    What happened then, they did not apply depreciation to this domain name, and i added extra 2000 depreciation over my cost of sale which had not been added because there is no depreciation.Also, they has not given any explanation why depreciation has not been applied

    From my point of view, it says that ”it has a negligible cost or it renewable indefinitely at a nominal cost” meaning that indirectly its price can not be determined changes frequently that is why it can not be depreciated in spite of being given remaining useful life.

    May 22, 2017 at 8:06 am #387379
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23359
    • ☆☆☆☆☆

    “however, it is renewable indefinitely at a nominal cost”

    That is the key – it has an indefinite life so we don’t have any idea of the period ver which it should be amortised

    OK?

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • The topic ‘Intangible asset in CSFP’ is closed to new replies.

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