QUESTION 2 (IAS 38) INTANGIBLE ASSETS
(30 marks)
Tigerbrand (Pty) Ltd is a manufacturing company that concentrates on organic foods. The
company is very successful. During the year the managing director became aware of the
standard on intangible assets IAS 38, for the first time. She wants to start applying this
standard to the research and development costs of the company, and requests your assistance.
The end of the reporting period of the company is 30 April 2018.
On 1 November 2017 the company purchased a trademark at N$50 000 from another company,
Organics (Pty) Ltd, that also manufactures organic food. The attorney charges, that were paid
in cash, amounted to N$10 000. The purchase price was settled by obtaining a loan of N$50
000. The new trademark is expected to produce an equal flow of economic benefits to the
company for 5 years.
REQUIRED:
a) Define the following concepts for the managing director:
Intangible asset (3)
Research (2)
Development (3)
b) Supply journal entries for the related transactions above.
Total (8)
(6)
