I need help with this. I need all of the questions answered and in detail please
ID: 2420583 • Letter: I
Question
I need help with this. I need all of the questions answered and in detail please! I would greatly appreciate it!
thank you
Required: Apply the definitions of asset or liability provided above, and answer the questions. Please provide an explanation for each answer based on the definitions caps lock shi Case 1: Assets The management team of the We-Bought-a-Zoo (WBZ) Company is concerned about the tragic plight of animals with incurable diseases. To attempt to stop the spread of pandemic diseases and to save the lives of infected animals, WBZ enters into an arrangement with a leading university to set up and operate a research facility. WBZ specifies the sole and unalterable aims of the research facility - find a cure for zebra tuberculosis (zebra TB) and feline leukemia. WBZ fn contro donates $3,000.000 to the university to completely fund the construction of a purpose-built donates $3,000,000 to the university to completely fund the construction of a purpose-buil laboratory on property located within the university campus. Construction is completed in 201 Construction is completed in 2014. Each year, subject to WBZ's approval of the center's budget, WBZ provides $1,000,000 to fund the operations of the research center that is staffed by the university's foremost researchers. In accordance with the agreement with the university, WBZ has the exclusive right to patent any cures discovered or developed (or both) at the research center Does the research center (building and equipment) satisfy the definition of an asset of What are the main judgments and estimates that WBZ would make when accounting for the PPE of the research center? WBz? 1. 2. 3. Does a patent developed at the research center satisfy the definition of an asset of WBZ? A team at the research center is developing a new drug for feline leukemia. In general, research and development of drugs take a lengthy period and require large investment; research failures and setbacks are not uncommon. Do the research and developm the drug satisfy the definition of an asset of WBZ? Are the executives on the management team of WBZ assets of the company, according to the definition of an asset? 4. 5.Explanation / Answer
Ans.1 Assets means obtaining future economic benefit as a result of past transaction or events,which is controlled by a particular entity.For deciding whether or not particular item is asset or not, consider following points:(1) Is there any future economic benefit out of it?(2)If yes then to whom or to which entity it belongs?(3) Is there any past event or transaction that made itan asset of an entity?Assets commonly are items that can be characterised as economic sources,Using scarce means people and other economic units carry out economic activiteis such as consumption,production and exchange.From above discussion research centre(building and equipment) satisfies the definition of an asst of WBZ as according to agreement with university has, it has exclusive right to patent any cures discovered or developed or both at research centre.Research centre funded by WBZ and it is also maintined by it, so it belongs to WBZ.To attemp to stop the spread of pandemicdisease and to save the lives of infected animals that made research centre asset of WBZ.
Ans.2 Estimate and Judgements for accounting for research centre(PPE) by WBZ are as follows:
1) Usefull life of asset(PPE)
2) Impairrement of Asset
3) Retirements benefits
4) Provisions
5) Taxation
Ans3. Yes it falls under asset.Patent developed at the research centre is an intangible asset. Though patent dont have physical existense like factory or equipment,they are very vauable and benefical for firm and critical for its long term success.They generally have life more than 1 year.WBZ as according to agreement with university has, it has exclusive right to patent any cures discovered or developed or both at research centre, which will give economic future benefit.
Ans.4 Research and development cost is not longer intangible asset or tangible asset. It is an operating expense on income statement, The cost applicable to it can not be estimated accurarely and also doubt exists about its future benefits.So,Research and development cost for the drug does not satisfy the definition of an asset of WBZ.
Ans.5 Executive on management team of WBZ company are not asset according to definition of asset. According to definion of asset, Assets means obtaining future economic benefit as a result of past transaction or events,which is controlled by a particular entity.Executives management are generally is a team of individual at the highest level of mangement who have day to day responsibilities of managing company.The are Personnal who are not owne by any entity. They get remuneraion for their work and it can be accounted as administration expenses in Profit & Loss Account.