Dear all,
Question: Can a company internally create an intangible asset for a supplier contract it has which ensures that the supplier will give the goods or services at a price which is lower than market (eg. a service of market price 100 USD and the company gets it at 90 USD) Can the company record an intangible asset against this contract? and if the company does recognize this asset … I believe equity will be raised by that amount as imputed equity or anything else?
I have read the IAS 38 however am unable to make an opinion on this.
However i believe this particular contract i am talking about does meet the recognition criteria.
looking for feedback…
If intangible asset was developed and created solely for selling purpose, than applicable IAS should be IAS 2 - Inventories and Inventory accounting principles would apply in such case.
Also may be doubtful why would someone sell product by price lower than market. Although, it is not stated in your question, I guess such transaction indicates on related parties so may be doubtful from the point of transfer pricing.
If so, try search IAS 2 - intangibles developed for trade and transfer pricing issues related to intangibles. Also search for regulation in this domain in your country.
I hope I helped a bit.
Thanks Flash… will read IAS 2… much appreciated
Not at all. I’m glad to help.