OLicence from the government to operate in its business sector for five years from 1 January2023Planning costs - new website, which will be launched in 2024Purchase of laptops for employees on 1 January with a useful life of 3 yearsMicrosoft user licenses purchased on 1 January 2023Training of new employeesConsultancy fees (including VAT @15%)Legal costs (including VAT @15%)Useful life of the intangible assetsR1 440 000R72 000R144 000R144 000R96 000R186 300R62 1005 yearsOn 1 January 2024, the company expected the revenue from the license to decrease as the government gazetted new laws resultingin the release of more licenses into the market. This was an indication of possible impairment.Management prepared the following cash flow forecasts:YearRandsDiscount factor2024372 0000.87342025300 0000.76282026258 0000.66622027234 0000.5818The market-related discount rate of the company is 14.5%The current gross selling price of the license in the market isThe estimated net cost to sell isR1 140 000R84 000

YearCash Flows (Rands)Present Value (Rands)2024372 000325 3032025258 000197 5392026234 000136…

Answered: O Licence from the government to…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter5: Business Deductions

Section: Chapter Questions

Problem 29P

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On 1 January 2020 a company purchased some plant. The invoice showed Cost of plant £61,000 Delivery of factory £850 One-year warranty covering breakdown during 2020 £700 Import duty £3,250 Installation fees £2,000 Modifications costing £3,150 were necessary to enable the plant to be installed. What amount should be capitalised for the plant in the company's accounting records?
Exercise 10-26 (Algo) Research and development [LO10-8] In 2021, Space Technology Company modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Acquisition of equipment Testing and modification of the prototype Legal and other fees for patent application on the new communication system Legal fees for successful defense of the new patent $2,700,000 820,000 440,000 74,000 340,000 54,000 34,000 $4,462,000 Total The equipment will be used on this and other research projects. Depreciation on the equipment for 2021 is $24,000. During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all of the above as costs of the patent. Management contends that the device simply represents an improvement of the existing communication system of the satellite and, therefore, should be…
Ronson recently purchased a new boat to help ship product overseas. The following information is related to that purchase: purchase price $4,500,000 cost to bring boat to production facility $15,000 yearly insurance cost $12,000 pays annual maintenance cost of $22,000 received a 10% discount on sales price Determine the acquisition cost of the boat and record the journal entry needed.
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