Question

Question 3 (Total 6 marks)

Biogen Pharmaceutical Ltd is a large pharmaceutical company based in Australia. During the year ending 30 June 2020, Biogen Pharmaceutical Ltd purchased two electronic databases containing scientific data related to respiratory drugs. Database A was acquired for $1,000,000 and contains data that is copyright protected. Database B was acquired for $800,000 and contains data that is not copyright protected. Required

(a) Explain whether Database A and Database B satisfy:

(i) The definition of an intangible asset in accordance with AASB 138 Intangible Assets, and

(ii) The recognition criteria for an intangible asset in accordance with AASB 138 Intangible Assets.

(b) If both databases were recognised by Biogen Pharmaceutical Ltd as intangible assets, explain:

(i) How the databases would be measured on initial recognition and subsequent to initial recognition, and

(ii) Whether the useful life of the databases would be assessed as finite or indefinite.

important: The relevant requirements of AASB 138 Intangible Assets have been appropriately applied and particularly explained.

.

Answer 1

A,INTAGIBLE ASSETS IS DEFINED AS AN IDENTIFIEBALE NON MONETORY ASSET WITH OUT PHYSICAL SUBSTANCE. HERE THE BOTH 2 ELECTRONIC DATA BASES ARE SATISFIES THESE DEFINITION.

THE RECOGNITION CRITERIA FOR THE INTAGIBLE ASSETS ARE

1. IT IS IDENTIFIABLE

2. ASSET IS CONTROLLED BY THE ENTITY

3.THE ASSET WILL PROVIDE FUTURE ECONOMIC BENEFITS TO THE FIRM

4.THE COST OF THE ASSETS IS MEASURED RELIABLY

INTAGIBLE ASSETS IS INTIALY RECOGNIZED AT COST

AFTER THE INTIAL RECOGNITION , ITS SUBSEQUENT MEASUREMEN IS AT COST OR REVALUATION MODEL.

IN COST MODEL MEASURES AT COST LESS ACCUMULATED AMORTIZATIONA

IN REVALUATION MODEL MEASURES ASSET AT FAIR VALUE LESS ACCUMULATED AMORTIZATION

AN ENTITY MUST ASSESS WHAETHER THE INTAGIBLE ASSETS HAS FINITE OR INDEFINITE LIFE, AN ASSET WITH FINITE USEFUL LIFE SHOULD BE AMORTIZED OVER THAT LIFE AND ASSET HAS INDEFINITE USEFUL LIFE SHOULDNOT BE AMORTIZED BUT IT SHOULD UNDERGOES FOR IMPAIRMENT TEST.