Answered: ) Do you think purchase of license to…

Pkg Acc Infor Systems MS VISIO CD

10th Edition

ISBN:9781133935940

Author:Ulric J. Gelinas

Publisher:Ulric J. Gelinas

Chapter17: Acquiring And Implementing Accounting Information Systems

Section: Chapter Questions

Problem 3P: JW Office Supplies, Inc., is a wholesale distributor of office supplies. It sells pencils and pens,...

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Analyse the following case and comment on the issues highlighted below. Muscat Pharmaceuticals Ltd is located in Muscat, Oman and is part of the Pharmaceutical Manufacturing Industry. Muscat Pharmaceuticals Ltd has 300 employees at this location and generates 48.49 million in sales (USD). There are 2 companies in the Muscat Pharmaceuticals Ltd corporate family. The company has business base in the Gulf and Middle East counties for almost a decade. Several products are already registered in all the Gulf counties. These are being marketed directly or through its distributors. Its core competency is to move aggressively and satisfy increasing demand from our clients and becoming a preferred business partner. The company has a team of over 50 experienced scientists specializing in Formulation Development, Analytical development and Conducting Stability Studies. During February 2020, due to outbreak COVID-19 Pandemic, the company acquired five years license to manufacture N95 Mask from a foreign company at a cost of OMR 3,000. Due to the emergency situation, the company started the production immediately. It also purchased a small company called Sahid International which has a brand name in the production of hand sanitizers. The brand value of this company is estimated to be OMR 20,000. Muscat Pharmaceuticals Ltd also spent OMR 2,200 on advertisement during the first 4 months which has resulted a significant improvement in sales figure and is expected that it will continue for next 4 years. i) Do you think purchase of license to manufacture N95 Mask can be recognised as intangible assets? Why or why not? If yes, how will you account the same as per the provision of IAS 38? ii) The brand name of hand sanitizers has acquired by the company as part of another company acquisition. Does this fulfil the criteria to be recognised as intangible assets as per the provision of IAS 38? Explain. iii) The advertisement expenses is boosting company’s ability to generate more sales for the next four years. The marketing manager is of the opinion to recognise it as an intangible assets. Do you agree? Comment.

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