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Cairns Ltd is considering four options to obtain computer software to use for their payroll...

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Question

Accounting

Cairns Ltd is considering four options to obtain computer software to use for their payroll and general ledger. The options are:

  1. Purchase the computer software externally.

  1. Contract independent programmers to develop specific software for the company.

  1. Buy computer software to incorporate into a product that the company will develop.

  1. Employ its own programmers to write software that the company will use.

Required

  1. For each of the four options, explain whether the computer software satisfies the definition of an intangible asset in accordance with AASB 138 Intangible Assets.

  1. For each option that satisfies the definition of an intangible asset, explain the recognition criteria that would be applied by Cairns Ltd.

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