Camel Telecom

Camel Telecom operates in the telecommunications industry under the name Mobistar which it developed itself. Camel has entered into a number of transactions relating to non-current assets on which it would like accounting advice.

(a) Camel won the government contest to be awarded a licence to operate 3.5G services. Only 4 such licences were available in the country. Under the terms of the agreement, Camel can operate 3.5G mobile phone services for a period of 10 years from the commencement of the licence which was 1 July 20X7. During that period Camel can sell the licence on if it chooses to another operator meeting certain government criteria, and sharing any profits made equally with the government.

Camel paid $344m for the licence on 1 July 20X7. Its market value was estimated at $370m at that date.

Due to lower take up than expected of 3.5G services, the fair value of the licence was valued at $335m at the company's year end 30 June 20X8, by Valyou, a professional services firm.

(b) In September 20X7, Camel has purchased a plot of land on which it intends to build its new head office and service centre in 2 years' time. In the meantime the land is rented out to a local farm. The land cost $10.4m. It has been valued at the year end by Valyou and has a value of $10.6m as farmland and $14.3m as land for development. Planning permission is in process at the year end, but Camel's lawyer expects it to be granted by mid 20X9.

(c) Camel purchased a number of hilltop sites a number of years ago on which (after receiving planning permission), it erects mobile phone transmitter masts.

Because of the prime location of the sites, their market value has increased substantially since the original purchase. Camel is also able to lease part of the sites to other mobile communication companies.

(d) During the year, Camel did a deal with a mobile operator in another country whereby Camel sold its fixed line ADSL business to another company Purple for an agreed market value of $320m and in return acquired Purple's mobile phone business in the other country. Camel paid $980m to Purple in addition to the legal transfer of its fixed line ADSL business. Purple did not make any payment other than the transfer of its mobile business.

Under the terms of the agreement, the mobile phone business will remain under the name Purple for up to 1 year, after Camel time intends to re-brand the business under its own national and international mobile brand Mobistar.

(e) An embarrassing incident occurred in February 20X8 where a laptop containing details of all of Camel's national customers and the expiry date of their contracts was stolen. The details subsequently fell into the hands of competitors who have been contacting Camel's clients when their Mobistar contracts are up for renewal.

As a result of this Camel has realised that the value of the client details is significant and propose to recognise a value determined by Valyou in its financial statements. This valuation of $44m  takes into account business expected to be lost as a result of the incident.     

Required

Discuss, with suitable computations, how the above transactions should be accounted for in the financial statements of the Camel Telecom Group under IFRSs for the year ended 30 June 20X8.

All amounts are considered material to the group financial statements.