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INTANGIBLES
DEFINITION
Identifiable non-monetary assets withoutphysical substance
and
controlled by the enterprise as a result of apast event
expected future economic benefits
(clearly separate from goodwill)
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INTANGIBLES
RECOGNITION probable that economic benefits will flow
cost can be reliably measured
MEASUREMENT
Initially at cost
± Separate acquisition
± Business combination
± Internally generated
Research is expensed
Development costs are capitalised if six conditions met
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INTANGIBLES
ALWAYS EXPENSE:
- Research costs
- Pre-opening costs (unless PPE)
- Establishment costs
- Training costs- Advertising
- Relocation/restructuring
- Internally generated:
- Customer lists- Brands,
- Mastheads, Publishing titles
- Goodwill
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INTANGIBLES
IMPAIRMENT
Apply principles on impairment
Recoverable amount estimated at each balance
date for intangibles:
± not yet in use
± Indefinite life intangibles
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NON-CURRENT ASSETS HELD
FOR SALE
Non-current asset (or disposal group) wherecarrying amount will be recovered through sale.
MEASUREMENT
at the lower of: fair value less costs to sell, and
carrying amount.
TREATMENT
Held for sale¶s not depreciated
Separate presentation on balance sheet of
assets & liabilities
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GOODWILL
Purchase price less fair value of netassets and contingent liability.
Negative goodwill ± no longer exists (since2004). Now called µBargain purchase
option¶ and shown as income in income
statement
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SPUR 2006
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SPUR 2006
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FULL GOODWILL METHOD
Not a policy choice !!!
Sub has net assets of R4m
Parent pays R3m for 60% of business
Fair value of 40% is R1.8m
100% 60% 40%
NAV 4 000 2 400 1 600
Cost 3 000 1 800
Goodwill 600 200
Current status 2009
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INVENTORIES
DEFINITION
Assets held for sale in the ordinary course of
business, in the process of production for such
sale, or in the form of materials or supplies to be
consumed in the production process or inrendering of services.
COST
= purchase price + costs incurred in bringing the
inventories to their present location and condition.
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INVENTORIES
Lower of Cost or Net realisable value
FIFO, Weighted average, LIFO, Standard cost and Retailmethod
Cost of inventory expense incl:
± cost of units sold
± unallocated overheads ± abnormal wastage costs
± write down to NRV
± reversal of write down
Disclose: ± cost of sales
± write-downs & reversals of write downs
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