MGT401 Assignment No 01 Solution & Discussion Due Date:04-12-2018
FINANCIAL ACCOUNTING II (MGT401)
ASSIGNMENT NO. 01
DUE DATE: 4
DEC, 2018MARKS: 30
After going through this activity, the students would be able to apply the analytical skills.
Topic: “Intangible assets” and “Property, Plant and Equipment”
Mark pharmaceuticals Ltd. (MPL) is a listed firm and famous for dealing in pediatric
medicines. Suppose you have been hired as financial manager of the company. The following
information is provided to you for the correct treatment as per IAS 38 (Intangible assets) for
the year ended June 30, 2018.
1. MPL has developed and patent two new vaccines A and B at a cost of Rs. 160 million
and Rs. 120 million respectively. Based on the market analysis, it is estimated that
Vaccines A would generate revenue of Rs. 300 million per annum for the next five
years and Vaccine B would generate a total revenue of Rs. 80 million for an indefinite
period of time.
2. An amount of Rs. 6 million paid for television advertising campaign that will cover a
period of 6 months from May 1, 2018 to October 31, 2018. The directors believe that
the campaign would help to boost sales growth (targeted at 8% for the next two years).
3. An amount of Rs. 5 million were spent on training of technical staff. The training
courses were conducted by leading experts ofpharmacy production and are expected to
improve the production quality significantly and reduce cost.
As per IAS38 (Intangible assets), you are required to explain how the above expenditure will
be accounted for in the financial statements of Mark pharmaceuticals Ltd. (MPL) for the year
ended June 30, 2018.
Mark pharmaceuticals Ltd. (MPL) has provided the following information about the assets of
the company at the end of year (June 30, 2018):
Land Acquired January 1, 2016 (at cost) 80,000
Office buildings erected on June 30, 2018 (at cost) 50,000
Fixture and fitting (at cost) 60,000
Accumulated depreciation of fixture and fitting on July 1,
Depreciation is calculated at 10% per annumon the basis of reducing balance method
for fixtures and fittings.
Buildings will be depreciated at 2% per annum on straight line basis.
You are required to prepare the notes to the financial statements of property plant and
equipment as per IAS 16 for the year ended on June 30, 2018.
Note: Thorough reading and understanding is required to answer the required questions.
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RULES FOR MARKING
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Kindly Send me the solution please
Koi allah ka bata help ker du plzz..last date hai
In your solution we should be deducted 2 million instead of 6 million. because the year is ending 30-06-2018.
Part A(b) is incorrect as there should be prepaid expense adjustment.
Part B there is mistake in depreciation calculation.
Notes to the financial statements of property plant and equipment as per IAS 16 are not prepared.
MGT401 Assignment#01 Correct Solution