Biogenics

(a) Over the last 20 years many companies have spent a great deal of money internally developing new intangible assets such as software. The treatment for these assets is prescribed by IAS 38 Intangible assets.

Required

In accordance with IAS 38, discuss whether internally-developed intangible assets should be recognised, and if so how they should be initially recorded and subsequently accounted for.

(b) Biogenics is a publicly listed pharmaceutical company. During the year to 31 December 20X9 the following transactions took place:

(i) $6m was spent on developing a new obesity drug which received clinical approval on 1 July 20X9 and is proving commercially successful. The directors expect the project to be in profit within 12 months of the approval date. The patent was registered on 1 July 20X9. It cost $1.5m and remains in force for three years.

ii) A research project was set up on 1 October 20X9 which is expected to result in a new cancer drug. $200,000 was spent on computer equipment and $400,000 on staff salaries.

The equipment has an expected life of four years.

(iii) On 1 September 20X9 Biogenics acquired an up-to-date list of GPs at a cost of $500,000 and has been visiting them to explain the new obesity drug. The list is expected to generate sales throughout the life-cycle of the drug.

Required

Prepare extracts from the statement of financial position of Biogenics at 31 December 20X9 relating to the above items and summarise the costs to be included in the statement of profit or loss for that year.