In: Accounting
REQUIRED:
Explain the accounting treatment for the customer list acquired by MCO Bhd in accordance with MFRS 138 Intangible Assets.
(e)Based on MFRS 138 Intangible Assets, state TWO (2) criteria that an entity must meet in order for the development costs (e.g. construction of prototypes) to be capitalised?
(f)Gigih Manufacturing Bhd decided to expand further by purchasing Puncak Jaya Bhd. The statement of financial position of Puncak Jaya Bhd as of 31 December 2019 was as follows:
Puncak Jaya Bhd
Statement of Financial Position
31 December 2019
Assets Equity and Liabilities
Plant (net) RM1,025,000 Share capital-ordinary RM 800,000
Inventory 275,000 Retained earnings 885,000
Receivables 550,000 Accounts payable 375,000
Cash 210,000
Total assets 2,060,000 Total equity & liabilities 2,060,000
An assessment report, agreed by both parties, indicated that the fair value of the inventory was RM350,000 and the fair value of the plant was RM1,125,000. The fair value of the receivables is equal to the amount reported on the statement of financial position. The agreed purchase price was RM2,095,000, and this amount was paid in cash to the previous owners of Puncak Jaya Bhd.
REQUIRED :
Determine the amount of goodwill (if any) implied in the purchase price of RM2,095,000. Show calculations.