14 February 2011
Active Asset Inc. owns a freely transferable taxi operators License which it acquired on 1st Jan 2011 at a initial cost of $10000. the usefull life of license is 5 years (based on date it is valid for). The entity uses the SLM to ammortise the intangible. Such Liscences are frequently traded between operators. At the balancesheet date on 31 dec 2012 Govt. permitted increase in fixed Taxi Fares. Hence the Traded Values of Such a license was revaluedas $12000 . Required: a. Journal Entries on 31st dec 2012 to reflect increase or decrease in carrying value on the revaluation of the operating license based on the credit values of the similar lisences.
b. Also what would be the resultant carrying value of the Intangible asset after the revaluation.?
14 February 2011
As per IAS 16, intangible assets that are acquired , which have finite useful lives are measured at cost less accumulated amortisation, and accumulated impairment loss.
So in your case, no entry is to be passed , while increase in value of licence.
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