Based on Week 4
Due Week 5 (due 25th March)
NOTE: Provide references for your answers and quote where you have written something that is word-for-word from a source Textbook Questions (15 marks):
Challenging Question 29 (5 marks)
Inglis Ltd has a number of taxi licences that are shown in the financial statements at cost. Can these licences be revalued to fair value and, if so, do they also need to be subject to periodic amortisation? Yes, if these taxi licenses are freely transferable, they can be revalued to fair value. The requirements of AASB 138 state that intangible assets may be revalued only if there is an ‘active market’. Most of intangible assets will not be able to be revalued as there is no active market for them given that most intangible assets are unique in nature, i.e. brands, masthead, copyright, patent or trademark. However, as paragraph 78 of AASB 138 states that in some jurisdiction, an active market may exist for freely transferable taxi licences, fishing licences or production quotas (Financial Accounting, 2011, pg256). Yes, they also need to be subject to periodic amortisation. Intangible assets that are considered to have a limited useful life are required to be amortised over their useful lives. The useful life of an intangible asset is defined at paragraph 8 of AASB 138 as the period of time over which the asset is expected to be used by the entity, or the numbers of production or similar units expected to be obtained from the asset by the entity (Financial Accounting, 2011, pg256). The taxi licences are limited to a fixed-term which meet the requirement of AASB 138. Therefore, taxi licences will be amortised over the useful life. Challenging Question 32 (10 marks)
Critical Thinking Question (10 marks):
The following is an excerpt from an article entitled “The Power of Brands” by Emily Chantiri and Kate Mills (Business Review Weekly, July 7 – 13, 2011, p. 16):
Surf and sports label Billabong...