Assignment:
Objective: The objective of this assignment is to learn to effectively research a technical aspect of accounting and communicate professional advice to a client
Topic 1:
Jonny Appleton our manufacturing engineer designed and then manufactured an item of machinery which enables us to dry the fresh produce used in our pickling plant much more effectively. As this item of plant was manufactured in-house the only costs associated with it was the additional materials we needed to purchase for the machine, which was $80 000. It works so effectively and efficiently that it cut our manufacturing time by about 2 hours per batch. The factory manager wants us to show this item at its fair value (estimated at $ 225 000 by him) and to recognise the gain as sales revenue. He thinks this is fair as he has been asked by two other businesses "Granny's Jam" and "Martha's Pies" if he would be interested in manufacturing a similar machine for them and is presently in the process of doing so. He says that this increases the goodwill of the company too, and wants us to show this asset in the financial statements for the year ending 30 June 2017. Can we do that? How should we treat this? We haven't had a transaction like this before.
Addition information: The first sentence you should mention the important information that the topic gave.
-Have to mention the Accounting Standard. What paragraph in AASB is associated with this topic?
-Can you recognize the machinery as an asset?
-Accounting standard 136: Intangible asset-requirement to test for good will
- Measurement requirement fair vale AABS30
-If you can recognize as part of research and development-go to requirement recognizing
-Any goodwill intelligent generated can never as asset
-Recommendation
-Reference
-Only one to one and half pages to answer this topic.