Transcribed Image Text: In each of the following scenarios (i) to (iv), advise on the appropriate accounting treatment for the intangible assets for year ended 31 March 2018. On 1

Transcribed Image Text: In each of the following scenarios (i) to (iv), advise on the appropriate accounting treatment for the intangible
assets for year ended 31 March 2018.
On 1 April 2017, HHH acquired, from a bankrupt competitor, a license to provide radio broadcast
services to a region within Ireland. This license would have been originally issued by the
government for a ten-year period at zero cost, but has a market value due to its exclusivity. The
cost of the license to Handsetter was RM3.3 million, and the remaining useful economic life was 6
years.
i.
ii.
On 1 April 2017, HHH commenced work on developing a new technology to enhance the quality of
the radio broadcasts. It purchased a number of patents at a cost of RM2 million and spent a further
RM6 million developing the technology, as well as RM2 million researching the international market
for the technology in advance of its launch. The directors of HHH were confident throughout the
development process that the technology had massive potential to generate future economic
benefit. On 31 March 2018, this opinion was validated when a rival broadcaster offered HHH RM15
million for its partially developed technology project.
i.
As a result of HHH’s growing reputation in the broadcasting industry, the directors commissioned a
consulting firm to value its brand name. The brand name has not been recognised as an asset in
the financial statements to date. On 31 March 2018, the consultants issued a report stating that the
fair value of HHH’s brand was RM20 million.
iv.
HHH has a portfolio of patents it developed over the past few years. These represent technologies
and processes used in the company’s business to generate economic benefits. The total carrying
value of these patents was RM2.8 million at 1 April 2017. They originally had a 15-year useful
economic life, but on average seven years remain to their expiry date. The directors propose, at 31
March 2018, to revalue this portfolio to its estimated fair value of RM5 million.

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