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Case (a) A Cement manufacturing organization incurred the following expenses during the year 2017.The establishment cost...

Case (a) A Cement manufacturing organization incurred the following expenses during the year 2017.The establishment cost for a new business facility was amounted to OMR 45,000, the cost of formulas and prototype was OMR 76,000, The design of pilot plan was OMR 172,000, The television advertisement cost was OMR 25,000, Goodwill acquired from purchase combination was OMR 65,000, Operating rights cost was 36,000 During the year, in house accounting software was developed by the organization at a cost of OMR 120,000.

Case (b) A new product was developed during the year. The expenditure totaled OMR 4.5 million of which OMR 3 million was incurred prior to 30 November 2018 and on that date it became clear that the product was technically viable. The new product will be launched in the next four months and its recoverable amount is estimated at OMR 2,100,000.

Case (c) A customer list was prepared by marketing division and through that innovative marketing strategies have been developed. The estimated cost of preparation of customer list was OMR 900,000 out of which the actual cost incurred for this purpose was OMR 650,000. Because of this cost the company has earned incremental revenue of OMR 450,000.

Case (d) The Company has acquired a formula from an organization for production of one variety of products. The cost incurred on acquiring the formula was OMR 200,000. The new product with the formula was popularized and the increased profit to the business over the next two years would be OMR 325,000

Required:

On the role of an accountant, assess ALL the above cases and justify your answer for ALL the cases about the capitalization of assets and charging of expenses as per the requirement so IAS 38

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ekkarill92 answered 1 year ago
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