Licensing Of Products / Chemicals

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Licensing of products/Chemicals. A substantial regulatory-risk relates to regulated-nature of industry in which CCL operates. If any item fails to be licensed, any costs already incurred are wasted. R&D costs are significant and failure to obtain necessary licences is a major threat to CCL’s business objectives. Court case and bad publicity Court-case against CCL will create reputational damage and it is un-ethical. As people suffering side effects, possible medical trials will lead to negative publicity and unethical, making it more vulnerable. Affecting market share especially, if entrants take advantage of situation. Lead to increased scrutiny of CCL’s activities. Provision Additional information is needed from management and some…show more content…
If likelihood is low, CCL only disclose this lawsuit-information in notes of financial-statement. Provision classified as operating-expense, so operating-margin for 20X3 would be decrease. Development cost A significant-amount, $975000, has been capitalised during-year in relation to costs arising on-development of new cool-top product-range. This represents 9•3% of total assets. Risk of inappropriately-capitalised, as IAS 38 Intangible Assets only permits capitalisation of development costs as an internally generated intangible asset when certain criteria have been met. There is a risk that non-current assets and operating-profit are overstated-by $975000. As criteria-have not been met, market-research does not demonstrate that new product will generate a future economic-benefit. There is also a risk that inappropriate-expenses, such as amortisation-cost needs to add back. Significant risk, write off intangible-asset, profit for year is $1553500, and retained-earnings will also be low. For Walton-work-wear company realize its technical and commercial-viability in 20x3 so capitalisation and amortisation is required in this year but in previous-year cost relates to that should be expensed. So an adjustment-may be needed in opening-balances. Internal Control Risk - High • Weakness in delivery policies and procedures – Dropped-off material without signing-proof of delivery by customer, indicates that internal-controls were not
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