PharmaNiaga Bhd (PNB) is considering its intangibleassets on how the matters below should be treated in its financialstatements for the year ended 31 March 2020.

a). On 1 October 2019, PNB acquired Halia Bhd, a smallcompany that specializes in pharmaceutical drug research anddevelopment on the usage of local source, halia hitam, for skincare products. The purchase consideration was by a share exchangeand valued at RM35 million. The fair value of Halia Bhd’s netassets was RM15 million (excluding any items referred to below).Halia Bhd owns a patent for an established successful product thathad a remaining life of 8 years. A firm specialist advisor,HebatBrand, has estimated the current value of this patent to beRM10 million, however the company is awaiting the outcome ofclinical trials where the product has been tested to treat adifferent skin problem. If the trials are successful, the value ofthe product is estimated to be RM15 million. Also included in thecompany’s statement of financial position is RM2 million formedical research that has been conducted on behalf of a client.

b). PNB has developed and patented a new drug which hasbeen approved for clinical use. The costs of developing the drugwere RM12 million. Based on early assessments on its sales success,HebatBrand, has estimated its market value at RM20 million.

c).PNB’s manufacturing facilities have recently receiveda favorable inspection by government medical scientists.Consequently, the company has been granted an exclusive five-yearlicense to manufacture and distribute a new vaccine. Although thelicense had no direct cost PNB, its directors feel its granting isa reflection of the company’s standing and have asked HebatBrand tovalue the license. Accordingly, they have placed a value of RM10million on it.                                                                             

d) In the current accounting period, PNB has spent RM3million sending its staff PNB’s on specialist training courses.Whilst these courses have been expensive, they have led to a markedimprovement in production quality and staff now needs lesssupervision. This in turn led to an increase in revenue and costreductions. The directors of PNB believe these benefits willcontinue at least three years and wish to treat the training costsas an asset.

e). In December 2019, PNB paid RM5 million for atelevision advertising campaign for its products that will run for6 months from 1 January 2020 to 30 June 2020. The directors believethat increased sales as a result of the publicity will continue fortwo years from the start of the advertisements.

Required:

Explain with reasons and justifications how thedirectors of PNB should treat the above items in the financialstatements for the year ended 31 March 2020.

Note: The values given by Hebatbrand can be taken asbeing reliable measurements. Ignore depreciation.