Crane purchased a patent from Bakhshi Co. for $1.8 million on January

Question:

Answer:

  1. Amortization = 1.8 m / 10 years
    = 180,000
    Carrying value at 1.1.2017 = 1.8 million – (2* 180,000) = 1,440, 000
    New amortization = 1,440,000/6 =240,000
    Therefore carrying value at 31.12.2017 = 1,440,000 – 240,000
    = 1.2 million
  2. Amortization = 630,000 / 25
    = 25,200
  3. Development cost amortization = 366,000 /5
    =73,200
    Unamortised development cost = 366,000 – (73,200*3)
    = 146,400
  4. Under ASPE only historical cost method is there. No revaluation model. amortisation is charged only for those who have a definite useful life. Here it is not clear about whether 5 years taken is actually the assets useful life. If 5 years given is the actual useful life then the answer would be same as above.

If there is indefinite useful life then there is no amortization and answer would be 366,000.

Under IFRS entity can choose between historical and revaluation models.

Leave a Comment

Your email address will not be published. Required fields are marked *