Define and distinguish between research and

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10 Define, and distinguish between, research and development. Outline and compare/contrast the requirements of AASB 138 for initial recognition of research anddevelopment. (L04)slide 32
Problem 4 Aerial Survey Ltd was floated as a public company on 1 July 2002 by its founder and firstchief executive officer (CEO), Pat Cairns. The company provides geological survey data tomining exploration companies and has been quite profitable.The founding CEO (and substantial shareholder) retired in January 2017 and a new CEO, Ray Steedman, was appointed. The new CEO has thoroughly investigated the operations and state of affairs of the company and is in the process of reviewing the preparation of the financial statementsof Aerial Survey Ltd for the year ended 30 June 2017. The following issues require particularattention:(i) Amortisation of intangibles - trade names. Certain trade names were acquired on1 July 2002. These have been revalued periodically to a carrying amount of $2 million,which is below the recoverable amountas assessed by an independent valuation.The new CEO believes these identifiable intangibles should be amortised over 10years, commencing this year.(ii) Research and development/recoverable amount. Over the past 14 years the companyhas generated an aerial survey database ('Aerodata'). The costs of gathering the data,and devising and improving the technology to record and retrieve the data, have beencapitalised (as research and development) and amortised. In the current period, salesof database information have slowed markedly and the new CEO undertook a reviewwhich showed:The new CEO has expressed the view that the recoverable amount should be based ondiscounted cash flows.Required

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