During the current financial year, Big Fuel Ltd has moved from the research phase to the development phase of an internal project designed to result ultimately in the marketing of a new motor vehicle fuel injection system. The company, through it separate fuel injection research and development division, has incurred the following costs during the financial year:
(a) Salaries of the division’s marketing department staff in developing materials to instil market recognition of the Big Fuel brand name.
(b) Salaries of divisional staff and costs of books and other reference materials incurred in obtaining knowledge of alternative possible fuel injection systems.
(c) Salaries of company staff, following a final decision on the new fuel injection system’s design, to evaluate possible alternative processes for production of the new fuel injection system.
(d) Design and construction of a pre-production prototype of the fuel injection system.
(e) Construction and operation of a small pilot production plant for manufacture of the fuel injection system.
(f) Administration and general office overhead expenditure arising from the research phase of the project.
(g) Administration and general office overhead expenditure arising from the development phase of the project.
(h) Fees to register a patent over the new fuel injection system design.
Required:
For each of the above costs, indicate whether that cost could be recognised as an intangible asset by Big Fuel Ltd in accordance with AASB 138. Provide relevant paragraph numbers from the standard to support your answer.
Internally generated intangible asset During the current financial year, Big Fuel Ltd has moved from the research phase to the development phase of an internal project designed to result ultimately in the marketing of a new motor vehicle fuel injection system. The company, through it separate fuel injection research and development division, has incurred the following costs during the financial year: (a) Salaries of the division’s marketing department staff in developing materials to instil market recognition of the Big Fuel brand name. (b) Salaries of divisional staff and costs of books and other reference materials incurred in obtaining knowledge of alternative possible fuel injection systems. (c) Salaries of company staff, following a final decision on the new fuel injection system’s design, to evaluate possible alternative processes for production of the new fuel injection system. (d) Design and construction of a pre-production prototype of the fuel injection system. (e) Construction and operation of a small pilot production plant for manufacture of the fuel injection system. (f) Administration and general office overhead expenditure arising from the research phase of the project. (g) Administration and general office overhead expenditure arising from the development phase of the project. (h) Fees to register a patent over the new fuel injection system design. Required: For each of the above costs, indicate whether that cost could be recognised as an intangible asset by Big Fuel Ltd in accordance with AASB 138. Provide relevant paragraph numbers from the standard to support your answer.??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????
Attachments:
Internally-ge….docx