Amigo Berhad
Introduction
Based on the Amigo Berhad timeline of activities which started from Year 2008 – Year 2013, I had found out that some of them are internally generated intangible assets. The recognition of internally generated intangible assets and broadly defines such expenditures as research and development. I would like to identify them year by year in accordance with MFRS 138.
Accounting Treatment for Year 2008 – Year 2013
Year 2008
The project that Amigo Berhad embarked is a research for the medicinal properties of the Tongkat Ali plants. Based on the MFRS 138, there has explain about that all activities aimed at obtaining new knowledge is considered as expenditure. Therefore, the project cannot be recognizing as an intangible asset and the cost of RM 300,000 should be written off in statement of comprehension income as an expense for the company.
Year 2009
The Tongkat Ali energy drink that create by the Amigo Berhad would improve stamina has help the body recover after workout. It is health for people and may help company earn profit in future. Based on the MFRS 138, there has explain that the development expenditure can be recognize as intangible asset when the asset is able to use or sell and generate probable future economic benefit, including demonstrating a market for the asset’s output, or for the asset itself, or the asset’s usefulness. Thus, the Tongkat Ali energy drink can be recognize as an intangible asset and RM1 million can be capitalized and considered as development cost.
Year 2010
The Tongkat Ali drink created by Amigo Berhad is not successful because the result of independent market survey result is not ideal as most customers feel that the drink is too bitter and that they did not see any improvement in stamina after drinking it. Based on MFRS 138, the cost incurred with RM 250,000 cannot be recognized as intangible asset as Amigo Berhad unable sell it to market for generate future economic benefits because of dissatisfaction of taste by customers. According to above information,