Page 75 - SBR Integrated Workbook STUDENT S18-J19
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Non-current assets
Example 5
Intangible assets
Sandcastle, a public limited entity, has spent $1 million in the current year on
advertising. Market research suggests that this has had a positive impact on
its brand perception by consumers. The marketing department calculated that
the Sandcastle brand name, an internally generated asset, has a fair value of
approximately $3 million.
The finance director wishes to capitalise the advertising spend and to record
the brand at fair value in the financial statements for the year ended 31
December 20X1.
Discuss whether the proposed accounting treatment is correct.
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