Question

In: Accounting

Assuming that MCO Bhd acquires the customer list of a social media for RM8,000,000. The company...

  1. Assuming that MCO Bhd acquires the customer list of a social media for RM8,000,000. The company expects to benefit from the information evenly over a four-year period.

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.

Solutions

Expert Solution

ekkarill92 answered 3 years ago
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