Tutorial question – IAS38 & IFRS15 On 1 January 2022, ABC given XYZ a licence with endless date to sell a flu product in

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Tutorial question – IAS38 & IFRS15
On 1 January 2022, ABC given XYZ a licence with endless date tosell a flu product in Southeast Asia. ABC has kept the right sellthe flu product in the rest of the world. The Southeast Asia’smarket relative value compared to the rest of the world is 15%. Theproduction process used to make the flu product is not specialisedand several other entities could also produce it for XYZ. XYZ willbuy flu product directly from ABC at cost plus 45%. The product hasbeen sold for a few years.
On 1 January 2022, XYZ made an advance payment of RM7.5 millionand will make an additional payment of RM1.5 million when SoutheastAsia sales exceed RM17.5 million. ABC had capitalised developmentcosts for flu as an intangible asset at a carrying amount of RM15million.
You are required to:
(a) propose how to account for the transaction above inaccordance with relevant IASs/IFRSs/MFRSs.
Format:
1.Brief relevant discussion on: Key definition, Recognition,Measurement & Disclosure/Presentation of IAS38& IFRS15.
2. Propose how ABC can account for the above transaction inaccordance with the above IASs.