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Please help me work out it, thanks. Miss Tess Chow, a...

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Accounting

Please help me work out it, thanks. image
Miss Tess Chow, a director of Magic Holding Limited (MHL), noticed that a patent acquired from an acquisition of a subsidiary has been recognised in the financial statements of MHL at its fair value on 31 December 2015. She would also like other intangible assets of MHL to be recognised in the financial statements at their fair values, and thus she has asked for your opinion on the following items: 1. MHL has a brand name, Magica, which has become well known since MHL $5 million. Tes asset and report it at $5 million in the financial statements of MHL developed it 10 years ago. Valuation experts have valued the brand name at s would like this brand name to be recognised as an intangible 2. MHL owns a 20-year patent which it acquired five years ago for $2 million and was recognised at its cost in the financial statements. Valuation experts have valued this patent at St0 millon tes would hke to report this patent at this patent at $10 million in the financial statements. Required: Discuss the appropriate accounting treatment for the brand name and the paten (HKICPA QP A December 2013, adapted)

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