Accounting Treatment of Repair and Maintenance Expenditure for Goodwill

Case Study Report
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Contents
Executive summary....................................................................................................................3
Introduction................................................................................................................................4
Background of the case study....................................................................................................5
Applicable accounting standard- AASB 138.............................................................................5
Classification as Goodwill......................................................................................................6
Definition of an intangible asset-...........................................................................................6
Justification of suggestion made by the marketing manager..................................................7
Accounting treatment.................................................................................................................8
Recommendations......................................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11
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Executive summary
The primary focus of this report is on proposal made by marketing manager of West Limited.
This proposal has suggested that management of the organization should offer to provide for
repair and maintenance expenditure of "The Steve Erwin" ship. This step expected to have
positive impact on Goodwill of the company as shape under consideration is working against
whaling and illegal fishing activities. The main focus of this report is to evaluate accounting
treatment of the proposal under consideration. According to AASB 138, accounting treatment
suggested by marketing manager is valid. All the expenses can be capitalized over the period
of time and it will be disclosed as Goodwill in financial statements. This report has also
provided accounting treatment of repair and maintenance expenditure in each and every
element of financial statements.
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Introduction
Intangible assets are also an important part of business organization as they help in improving
profitability of a company. For example trademark registered by the company will be helpful
in ensuring that other organizations are not copying product and services of the company.
Therefore overall revenue will be higher in situation where is trademark registered as
compared to situation in which trademarks and not registered by a particular organization.
The main objective of this report will be to assess the situation presented by marketing
manager of West Limited. West Limited is a business organization that is operating in frozen
and canned fish produce. It is one of the leading organization in this industry and significant
contribution of its revenue can be given to its environmental-friendly practices (Kaplan and
Atkinson, 2015). This report will be concerned with intangible assets that are created by
organization in order to improve their reputation in market with their target customer. The
primary focus of this report will be on AASB 138 issued by Australian accounting standard
board. Principles of these standards will be discussed to evaluate the case study of West
Limited.
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