Buy Johan Limited Company Analysis Essay

In accounting for license the following accounting procedures should be used: amortization, impairment and reliable valuation of intangible asset and its economic benefits. Impairment is a very important procedure in this case because sometimes the book value of license may not correspond with the possible economic benefits that can be gained using it. And the adjustments have to be done.

The next step is to evaluate the costs incurred in extending the network. These costs include research expenditure and payment to the local government for the land for construction.

According to the accounting standards research costs can be recognized as an asset. Thus their value can be added to the value of some particular asset.

Payment to the local government for the right to use a land for constructions is, in fact, operate lease and should be accounted for according to the principles of accounting for operate lease.

Handsets that are purchased by the company and sold to the customers and dealers are, in fact, inventory. The question is how to recognize the revenue from selling them to customers and dealers. "When inventories are sold and revenue is recognized, the carrying amount of those inventories is recognized as an expense (often called cost-of-goods-sold). Any write-down to NRV and any inventory losses are also recognized as an expense when they occur" (IAS 2 Inventories).

The revenue from selling of handsets by the company to the customers should be recognized when the goods are delivered to the customers. Because there is a strong possibility that these goods will be paid by the customers and the possible economic benefits can be measured reliably.

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