Delivery in day(s): 3
HI6026 Accounting Theory and Current Issues
This program has been executed over Accounting Theory & Current Issues so as to analyse the impacts of the various business theories over the performance of the business. In this program discusses a case study of Bio-Sustainable Feeds (BSF) Ltd. which is an Australian bio-research firm. It is listed on the Australian stock exchange and it is enrolled in the research over the sustainable aqua-culture feeds from the last two decades. There are several issues which have been identified which are affecting the environment in different ways. Bio-Sustainable Feeds (BSF) Ltd. is focusing over the production of the fish feeds in different ways by using different resources so as to improve the quality of the fishes. Bio-Sustainable Feeds (BSF) Ltd. is involved in the process of research and development so as to analyse and identify the different options or ways which are available so as to develop fish feeds with the use of the bacteria from the residues of sugarcane, the methane gas from the sewage or wood chips. The reason behind the engagement in the research and development process is to solve the issues faced. A grant of $500 million AUD was given to Bio-Sustainable Feeds (BSF) Ltd. from the Commonwealth Scientific and Industrial Research Organisation. Bio-Sustainable Feeds (BSF) Ltd. is planning to utilise this grant so as to develop new method for the aqua-culture feeds by conducting research.
This program discusses the nature and value of the research which is being executed by Bio-Sustainable Feeds (BSF) Ltd. to the society, the problems which have been analysed during the early stages of the execution process of the research conducted by Bio-Sustainable Feeds (BSF) Ltd., nature and the differences between the research and development and how research and development is used by the firms and the reason behind using research and development. The fair market value of the patent is also calculated by taking necessary assumptions and journal entries for the research and development transactions conducted between 2013 to 2016 and how justified were the assertions made by Bio-Sustainable Feeds (BSF) Ltd.
1. Discuss the nature and value to society of the research being done by BSF Ltd.
Bio-Sustainable Feeds (BSF) Ltd. is an Australia based company which is listed in Australian Stock exchange and involved in the bio-research for the research and development of an innovative technique for dealing with the different issues faced by or analysed by Bio-Sustainable Feeds (BSF) Ltd. this research product undertaken by Bio-Sustainable Feeds (BSF) Ltd. has been executed so as to provide a better way for improving the quality of fish and to develop fish feeds by using innovative techniques. The research and development project has resulted into the development of new techniques which enables the fishers to improve the effectiveness of their business (CBC, 2016). The research and development process or program of Bio-Sustainable Feeds (BSF) Ltd. helped in the development of the technique through which fish feeds can be produced by making use of the bacteria. This research has helped in the development of a technology which focuses over the safety of the environment and provides a medium for enhancing the fish quality and quantity. The program has been conducted in an effective and efficient manner so as to provide a better way or technique for reducing the chances of malnutrition or starvation among the poor due to lack of availability of the food crops for the consumption of the people (Lothe, 2013).
Fish farming is an important aspect for the environment as fish farming helps in saving the fishes and their species from getting extinct. Fishes supports the environment by reducing the water pollution and improving the quality of water. Fish farming was having negative impact over the society as the fish feeds were produced by the fishers by making use of the corn, soybean and sunflower. These crops are used by the people for their consumption and use of these crops as fish feeds affect the lives of the people of the society and may results in less availability or non-availability of the crops for the consumption of the society. The new technique developed by Bio-Sustainable Feeds (BSF) Ltd. helps in saving these crops and providing these crops for the consumption of the people of the society and saving the environment (Sarker, et. al., 2016).
2. Discuss the problems with the early the research done by BSF Ltd.
During the initial levels the fish feeds were produced by the use of the crops such as canola, corn, soya-bean and sunflower or by the use of the small fishes. Small fishes were used as food or fish feeds for the big fishes and these small fishes were provided natural feeds. This proved to be an expensive way for the preparation of the fish feeds and also affected the availability of the crops for the consumption of the society (CBC, 2016). Due to this process the quantity of the small fishes was getting reduced and the increase in the number of cases of people suffering from malnutrition and starvation which gave rise to a concern for the Bio-Sustainable Feeds (BSF) Ltd. and formed a basis for the development of a new technique which will use bacteria for the production of the fish feeds. There are several problems which arise due to the production of the fish feeds from the plants and these include the increase in the cost which results in increase in the investment made by the companies and increases the burden over the companies (Rust, et. al., 2011).
Bio-Sustainable Feeds (BSF) Ltd. identified these issues or problems so as to develop a technique for reducing or eliminating the impact of the production of fish feeds from the use of crops. Bio-Sustainable Feeds (BSF) Ltd. conducted or executed a research and development program so as to develop a new technique and it made investment for the purpose of execution of the research program in a successful manner. But Bio-Sustainable Feeds (BSF) Ltd. faced a failure of the research which resulted into a loss to the company due to failure of the experiment which was conducted on Piscavorian fish and other fishes. The research also identified a problem related to the depletion of the quality of the environment which affects the health of the people of the society (Sarker, et. al., 2016).
3. Define and discuss the nature of and differences between research and development (R&D). Also, discuss how research and development are accounted for, why the differences, and why firms engage in R&D.
Research and development is an important aspect for every business which affects the effectiveness as well as performance of the business. Research and development helps in gaining a competitive advantage over the others and grabbing the opportunities available to the business in a better manner. In every business there are separate departments for the research and development which performs the functions with a motive to develop the operations of the business (Barge-Gil & López, 2014).
The term research can be understood as the investigation in a systematic manner so as to study the material and sources for the purpose of establishment of the facts and drawing conclusions. Both the aspects are related to each other and help in drawing conclusions for the different situations.
The term development can be understood as the process of analysis and identification of the innovations or modifications in the existing methods so as to improve the performance of the business. It helps in the generation of the new ideas for the purpose of attaining effectiveness (Goldense, 2015).
Difference between research and development is as follows:
Research can be understood as the process of investigation which helps in the analysis of the different aspects related to the program or the project.
Development can be understood as the process of analysis of the innovations in the existing aspects so as to enhance the performance of the program.
This is the first step in the research and development process.
Development process of the research and development is the second step which takes place after the research.
Motive of research is to evaluate or analyse a new idea so as to give rise to invention for the purpose of bringing effectiveness in the operations of the business. It is crucial for every business to conduct research programs so as to enhance the performance of the business (Mizoguchi, et. al., 2016).
The motive behind the development is to innovate or make changes or modifications in the process for utilising the product in the most suitable manner.
4. What is the fair market value patent—give your assumptions and calculations.
Fair market value can be understood as the estimated value or the price of a property in which an individual is reasonably interested in the purchase of the property by paying an amount. This amount which the individual is ready to pay is the fair market value the product. Bio-Sustainable Feeds (BSF) Ltd. is holding a patent for the use of a technology which helps in the production of the fish food or feeds with the use of the bacteria. This method used by Bio-Sustainable Feeds (BSF) Ltd. For producing fish feeds is an effective way for the purpose of production of the fish feeds. For determining the fair market value of the patent held by Bio-Sustainable Feeds (BSF) Ltd., the demand of the patent in the market and the price which can be affordable by the purchasers need to be analysed. Bio-Sustainable Feeds (BSF) Ltd. Need to consider the amount or cost incurred during the research and development program of the technology of the patent for the production of the fish feeds. In the case study of Bio-Sustainable Feeds (BSF) Ltd (Dorchester, 2011). Two situations have been provided and these situations are:
Case A: 200 million AUD every year for ten years
Case B: $700 million AUD for two years
The discount rate for the calculation of fair market value of the patent is 8 %. The fair market value of the patent will be analysed for both the cases so as to determine that which condition should be selected by Bio-Sustainable Feeds (BSF) Ltd. The fair market value of the patent for the first case is $1342.016 Million AUD and the fair market value of the patent for the second case is $1200.274348 Million AUD. This analysis or calculation of the fair market value of the patent in both the cases has helped in the evaluation that the Case A is more effective and suitable and must be selected (Huber, 2015).
Expenditure (A $ Million)
P. V. factor amount
Expenditure (A $ Million)
P. V. factor amount
5. Show the full set of journal entries for the R&D transactions from 2013 to 2016 (include the grant from CSIRO) and explain your decisions—especially how you treated the CSIRO grant.
Research and development program has been conducted by Bio-Sustainable Feeds (BSF) Ltd. for the purpose of development of the new methods or ways for producing the food feeds for the fishes so as to improve the quality of fishes. This process includes various activities and these activities and their impacts or treatment is recorded in the form of journal entries. These journal entries are as follows:
Journal entries of BSF Ltd. for year 2013 to 2016-
Dr (A $ Million)
Cr. (A $ Million)
Cash a/c Dr.
To capital account of R&D
(Bio-Sustainable Feeds (BSF) Ltd. made initial investment for the production of the plant based feed)
Loss of production a/c Dr.
To purchase a/c
(Loss incurred by the collapse of the high-value piscavorian fish due to the failure to thrive) (Hollenstein & Berger, 2015)
Grant/ donation a/c Dr.
To CSIRO a/c
(Commonwealth Scientific and Industrial Research Organisation provided grant to Bio-Sustainable Feeds (BSF) Ltd.)
R&D a/c Dr.
To bank a/c
(Expenses incurred during the execution of the research and development program by Bio-Sustainable Feeds (BSF) Ltd.)
R&D a/c Dr.
To bank a/c
(Expenses incurred while conducting the activities or operations of the research and development program by Bio-Sustainable Feeds (BSF) Ltd.)
Alternative aquaculture feeds Dr.
To capital a/c
(Commitment made by Bio-Sustainable Feeds (BSF) Ltd. for the purpose of making investment in the various aquaculture feeds)
Alternative aquaculture feeds Dr.
To capital a/c
(Bio-Sustainable Feeds (BSF) Ltd. made commitment for making investment in the various alternative of aqua-culture feeds) (Bertrand, et. al., 2012)
6. BSF Ltd. management asserted in a prospectus that the patent values were predicated on BSF Ltd. having exclusive control over the bacteria-based feeds technology. How reasonable is that assertion—support your answer with references to current and recent (e.g. last decade or so) research.
An innovative technique has been developed by Bio-Sustainable Feeds (BSF) Ltd. and the technique and according to this technique a bacteria is used for the purpose of production of the fish feeds with a motive to improve the quality and quantity of the fishes and leads to effectiveness in the whole process. This technique is developed with a motive to help the fishers so as to increase the number of fishes and maintain the quality of the fishes as the fishes help in reducing the water pollution. Bio-Sustainable Feeds (BSF) Ltd. holds a patent for the development of the technique which uses bacteria for the production of fish food. Bio-Sustainable Feeds (BSF) Ltd. is having a right to decide or determine the fair market value of the patent and to sell it to the buyer. Government is planning to use this technique so as to provide a better manner or method for the fishers for improving the quality of the fishes. This program discusses two cases which consist of different conditions for the determination of the fair market value of the patent. Government has provided grants to Bio-Sustainable Feeds (BSF) Ltd. so as to provide adequate funds for the execution of the research and development program in an effective manner (Chen & Zheng, 2014).
From the analysis of the conditions of the cases it has been evaluated that the case A is suitable for the purpose of determining the fair market value of the patent for the technology. An effective control is provided over the innovations and the patent of the technology which has been developed by the assertion of patent in the prospectus of the company. This patent has been considered or recognised as an asset for Bio-Sustainable Feeds (BSF) Ltd. and it can sell the patent as per its will. The initial investment of Bio-Sustainable Feeds (BSF) Ltd. over the research and development program of the fish feed was of $360 million AUD and it also received a grant for the research and development of $ 500 million AUD. The amount of grant received was used for the research and development in two parts or instalments and these two instalments were of $340 million and $160 million. Bio-Sustainable Feeds (BSF) Ltd. has decided to invest a sum of $200 million AUD in two years so as to develop alternative aqua-culture feeds for the fish. All these aspects form a base for the assertion of patent and prove the assertion of patent as reasonable (Chen & Zheng, 2014).
This program has discusses a case of Bio-Sustainable Feeds (BSF) Ltd. which is involved in the research and development program for the purpose of development of the alternatives for the aqua-culture feeds so as to improve the quality of the fishes. This program will discuss different aspects so as to gain knowledge of the research and development process and its importance in the society. This report has also discussed the fair market value of the patent and making journal entries for the purpose of recording the various transactions involved in the research and development process of the Bio-Sustainable Feeds (BSF) Ltd.
Barge-Gil, A. & López, A. 2014, "R&D determinants: Accounting for the differences between research and development", Research Policy, vol. 43, no. 9, pp. 1634-1648.
Bertrand, O., Hakkala, K.N., Norbäck, P. & Persson, L. 2012, "Should countries block foreign takeovers of R&D champions and promote greenfield entry?", The Canadian Journal of Economics / Revue canadienne d'Economique, vol. 45, no. 3, pp. 1083-1124.
CBC. 2016. Shift to plant-based fish feed could hurt health, environment, CBCNews Technology & Science, (23 Mar/16), Retrieved on 11 Jul/16 from: http://www.cbc.ca/news/technology/aquaculture-feed-1.3262922
Chang, Y. 2012, "Economic Value or Fair Market Value: What Form of Takings Compensation Is Efficient?", Supreme Court Economic Review, vol. 20, no. 1, pp. 35-88.
Chen, L. & Zheng, Y. 2014, "Regulating forward-looking information in offering prospectus and periodic disclosures in Chinese securities market--past, present and future", Capital Markets Law Journal, vol. 9, no. 4, pp. 388.
Dorchester, J. 2011, "Market value, fair value, and duress", Journal of Property Investment & Finance, vol. 29, no. 4/5, pp. 428-447.
Goldense, B.L. 2015, "The Difference Between Research and Development", R & D, .
Hollenstein, H. & Berger, M. 2015, "Choice of Foreign R&D Entry Mode and Its Relation to Firm Performance: A Firm-level Analysis for Switzerland and Austria", Economics: The Open-Access, Open-Assessment E-Journal, vol. 9, no. 34, pp. 1.
Huber, B.R. 2015, "The fair market value of public resources", California Law Review, vol. 103, no. 6, pp. 1515.
Lothe, R. 2013. Fish feed-research may help reduce world hunger, ScienceNordic, 17 Mar/13, Retrieved on 11, Jul/16 from: 20 http://sciencenordic.com/fish-feed-research-may-help-reduce-world-hunger.
Mizoguchi, H., Yamanaka, T. & Kano, S. 2016, "Research and drug development activities in rare diseases: differences between Japan and Europe regarding influence of prevalence",Drug Discovery Today, .