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On 30 November 20X1, 65% of Scramble's total assets were mainly represented by internally developed intangible assets comprising the capitalized costs of the development and production of online computer games. These games generate all of Scramble's revenue. The costs incurred in relation to maintaining the games at the same standard of performance are expensed to profit or loss for the year. The accounting policy note states that intangible assets are valued at historical cost. Scramble considers the games to have an indefinite useful life, which is reconsidered annually when the intangible assets are tested for impairment.
 
Scramble wished to diversify its operations and purchased a professional football club, Rashing. In Rashing's financial statements for the year ended 30 November 20X1, it was proposed to include significant intangible assets which related to acquired players' registration rights comprising registration and agents‘ fees. The agents' fees were paid by the club to players' agents either when a player is transferred to the club or when the contract of a player is extended. Scramble believes that the registration rights of the players are intangible assets but that the agents fees do not meet the criteria to be recognized as intangible assets as they are not directly attributable to the costs of players' contracts.
 
 
Discuss how the above issue should be dealt by Scramble for its financial statements.

Requirements:

Discuss how the internally developed intangible assets should be dealt by Scramble for its financial statements.

Marks: 5

Discuss how the issues relating to the contracts with players, and agent's fee should be accounted for in the financial statements of Scramble.

Marks: 6

Answers submitted

Created by Ref Marking Action
Kawsar Ahmed's picture
Kawsar Ahmed
04/09/2021 - 20:59

10269
6
Kawsar Ahmed's picture
Kawsar Ahmed
04/09/2021 - 20:58

10267
5