a) During the financial year, Tupae Airways spent TZS200 million on acquiring rights to land at the airport, for the current financial year. Are these rights an intangible asset?
b) Pambana Plc. acquired a business for TZS6m from Jiamini. Net tangible assets acquired had a fair value of TZS5.3m. Jiamini had a valuable licence which was not recognised in its books. The Chief Accountant of Pambana calculates its value at TZS0.7m and says that it is not necessary to record the licence separately. A reliable estimate of the fair value of the licence is placed at TZS0.3m. Advise the accountant about the values he should consider for the goodwill calculation.
c) On 1 December 20X6, Safiri Corporation acquired a transport licence (for running buses on a route) from Talii Enterprises at a cost of TZS40 million. The licence expires on 1 January 20X7. It enables the holder to renew it further for a period of 3 years with a nominal cost. A new entrant has to pay a premium of TZS50 million to the local authorities according to their rules. Safiri Corporation renews its licence by paying a negligible fee of TZS100,000. Ignoring amortisation, how should it treat the cost of TZS40 million in the statement of financial position at 31 December 20X6?