- 15 Marks
FR – L2 – Q31 – Intangible Assets
Prepare extracts of financial position and intangible assets note for Cape Coast Pharmaceutical, correcting erroneous write-offs per IAS 38.
Question
Cape Coast Pharmaceutical Limited (CCPL), a listed company, purchased a brand on January 1, 20W9 at a cost of GH¢382 million. It has incurred a substantial amount on further development of the brand in subsequent years.
It is the policy of CCPL to amortise the development expenditures which meet the recognition criteria as given in IAS-38 Intangible Assets, over a period of ten years. The amortisation commences when the development expenditures first meet the recognition criteria. However, it was discovered during the year 20X4 that the development expenditure incurred after acquisition had erroneously been written-off to the statement of profit or loss, details of which, are as follows:
| Year ended | GH¢m |
|---|---|
| December 31, 20X1 | 24 |
| December 31, 20X2 | 54 |
| December 31, 20X3 | 38 |
| December 31, 20X4 | 43 |
The draft financial statements (before correction of error) show that retained earnings as at December 31, 20X4 was GH¢1,950 million (20X3: GH¢1,785 million).
Required
In accordance with the requirements of International Financial Reporting Standards, prepare relevant extracts of the Statement of Financial Position along with the note on intangible assets after incorporating the required corrections. (Ignore tax)
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