QUESTION 3 DVD Pty is a company selling DVDS by sending emails to prospective customers. The company has acquired at a cost of $500,000 a customer list from another company that also markets its products in a similar fashion. DVD Pty Ltd estimates that that it will generate sales from its list for a minimum of 2 years and a maximum of 3 years. During the first year, the company intends to add names to the list from answers to a questionnaire attached to each of the emails it sends to customers. This should extend the useful life of the list for another year. Required: Discuss how the company should account for the customer list in accordance with the relevant Australian Accounting Standards.

QUESTION 3 DVD Pty is a company selling DVDS by sending emails to prospective customers. The company has acquired at a cost of $500,000 a customer list from another company that also markets its products in a similar fashion. DVD Pty Ltd estimates that that it will generate sales from its list for a minimum of 2 years and a maximum of 3 years. During the first year, the company intends to add names to the list from answers to a questionnaire attached to each of the emails it sends to customers. This should extend the useful life of the list for another year. Required: Discuss how the company should account for the customer list in accordance with the relevant Australian Accounting Standards.

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 1QE

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