HI6026 Accounting Theory and Current Issues Editing Services

HI6026 Accounting Theory and Current Issues Editing Services

Management Summary

The report is about the Bio- sustainable Feeds (BSF) Ltd. which is a bio research company in Australia and is also listed on the stock exchange of Australia. The company is involved in the research and development activities on the sustainable aqua culture feeds for twenty years. (BSF) Ltd. is developing alternative feed for aquaculture as the plant based feed is causing harm to the health of fishes and it is also harming environment as the high quality food crops are being used for developing high quality fishes which is ultimately snatching the food from the poor and developing food for rich population. BSF is now researching on the use of bacteria for developing fish feed from the residues of sugarcane or the methane gas from the sewage. The cost of the research to BSF Ltd is $160 million AUD plus $200 million AUD for the development. Among which, $500 million AUD is received through Grants from the government on the condition that BSF Ltd. has to spend at least $100 million AUD every year on the alternative agricultural feeds too. The actual expenditure was $500 million AUD including the basic cost $340 million AUD and the development cost of $160 million AUD plus the expenditure on the development of alternative aquaculture feed worth of $200 million AUD annually. The patent value of the product is $700 million AUD for 2 years and $200 million AUD for 10 years.

The nature and value to society of the research being done by BSF Ltd

It is clear from the given case that the plant based feeds are providing harm to the environment and it is also creating disparities between the rich and poor as the plants are used to develop high quality fishes which is generally the food for the rich people. That is why BSF Ltd. is getting involved in the research where is it using bacteria to produce feed for fishes. For higher quality in the fish farming, a new type of fish feed is been developed from the bacteria (Lothe, 2013).

The main aim and purpose of the research is to discuss the recent issues in the aqua culture and to focus on the research and development activities.  It is found that the company has to incur costs to bring new developments into the sustainable aqua feeds. The industry wants to make the fish farming more sustainable and for this the fishes are fed with the plant based feed instead of other fishes. Plant based feeds are made up of corn, soybean, sunflower, etc. which is seriously affecting the health of the fishes and also affecting the environment (Kraugerud, et al., 2011). This research is valuable for society as this research will be able to reserve the plants for the consumption of humans. These plants are soya, beans or other food plants which are taken by humans. The human population is growing across the world at a good rate which needs basic necessities for survival like food and water. The consumption of food products, if consumed in making the fish feed then there will be shortage of food for humans which will not affect rich people but will have a considerable effect on the poor people who cannot afford fishes or any other food for consumption (Sugita, et al., 2012). So, the research focuses on the development of fish food which should be made from the material which is not good for the human being consumption and is good for farmed fishes and their health so that the society can grew well and the disparities can discontinue.  From the different experiments it is also been clear that fishes are able to digest the yeast or bacteria in a better way than the fishes who are fed with the high quality of fish feed (CBC, 2016).

Discuss the problems with the early the research done by BSF Ltd.

The early researches by BSF Ltd. were on the development of Plant feed which were not a suitable feed for fishes. For bigger carnivorous fishes, the natural feed is the smaller fishes and in the recent years the fishmeal has been reduced and protein plant feed is given to fishes which is considered as an alternative to the natural fish feed which does not restrict the growth and the health of the fishes. But the plant feeds which are made from beans or soya contains high amount of fibre and starch which is not good for fishes as they are not able to digest them. They also affect the digestive system of the fishes and also make their bones too soft but the research team of BSF Ltd. found that the fish feed should be made from high quality protein which can be extracted from bacteria, yeast or algae which are helpful in reducing the ill effects of the plant feed (Nasopoulou & Zabetakis, 2012).

Also the research on the plant feed cost the company around $360 million AUD in which around $120 million AUD collapse were wasted due to the failure of the Piscavorian fish which is a high value fish and eats other fishes like salmon and tuna.  Also the conversion rate of plant based feed is 30 kg of plant feed into 1 kg of high quality fish which is quite higher than the conversion rate of fish feed into high quality fish. The problem was also related to the health of fishes which was depleting due to the plant based feed because the fishes are not able to digest and exploit the fats, carbohydrates and fibre which makes worse the whole digestive system of the fishes (Lee, et al., 2015).

One of the biggest problem was the harm which the plant based feed was providing to the environment. According to the environmentalists, the focus is diverting from the crops for humans to the high quality fish farming which is creating the differences between the rich and poor as the high quality fishes which are given much more attention can feed rich people but not the poor people which are dependent on crops and lower quality of fishes which are cheaper and can be easily affordable by them. Without the availability of lower quality of fishes, the poor people can face malnutrition or also starvation (Rust, et al., 2011).

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 is when different materials and sources are studied in order to gain new insights on the particular topic and to develop conclusions on the basis of those resources. Research is not a onetime activity; it is a process which helps in making a view and conclusions on any problem or question. For e.g. before buying  care, a research is necessary for knowing the reviews of the experts on the car, the experiences of real customers, its price, comparison to the peers, etc. After getting all the knowledge, it is been analysed and then the conclusion is made. Research helps in making many crucial and important decisions in the life of an individual. Without research, no sensible decision can be made. The decisions which are made without taking up research often lack sense and justifications. There are many types of researches in every field which helps the people to get through the information and reach the conclusions ("International journal of innovative research & development", 2012).

Development refers to the process of using the research and creating new technology or information which can improve the existing versions of the technology and information. For e.g. a company do research by collecting information from various sources and then this information are used for the development of new products or services which are innovative or different from the existing ones. The developed product or service is the upgraded one which is the final result of Research and Development.

Differences between research and development (R&D)

While Research is the investigation done by going through different resources, development is something which takes place when research is done. Development is started after research and it leads the research to the conclusion that is the end product. Research is the theoretical investigation and development is the practical implementation plan of the researched material. The process of Research and development starts with research, but the process is taken forward by development and then ended by the same by creating something upgraded, new or innovative ("International journal of innovative research & development", 2012).

Research and development are accounted to identify the activities and the costs which are considered while taking up research and development activities. It also includes the grants which are received from government and other sources for R&D activities. AASB138 is applied to the accounting of Research and development which is generally for the intangible assets. This accounting is required to state the expenditures which are taken while doing Research and development in the company

The firms take up R&D activities to bring innovation and up gradation in the products and services which is necessary to fight the present competition in the market. There is a direct link between R&D and innovation which is necessary as in recent year’s innovation has become necessary for the companies to survive in the industry. The companies have to make investment for taking up R&D activities but this investment is converted in to profits once it provides the results. The results of R&D are not always positive but the innovative products or services which are developed provides higher amount of revenue, profits and sales to the companies. Also it provides new insights to the companies which help in solving the existing problems and to develop the suitable solutions for future ("International journal of innovative research & development", 2012).

What is the fair market value patent—give your assumptions and calculations

Fair market value is the amount of estimated market price of the patent based on the demand of patent in the market or paying amount that all the potential buyers are ready to or willing to pay in the market to acquire patent for the period of given time. It could be said to be the simplest expression of price, the buyer is ready to pay to acquire the given property in the market. In this case study we will have clear idea about how BSF Ltd. is researching and making adequate payment to develop a new patent for protecting fishes or avoiding fish dyeing cases in the safe manner.

In order to compute the fair market value of the patent we have to compute all the expenses made by BSF Ltd. is researching program and  at the same time using present value factors to convert all the past expenditure in the present value.

Fair market value is concerned with all the expenses made by the company to develop a new patent throughout the time.  In order to determine the patent fair market value we will use the cost approach, in which we will use different set of expenditure made by the BSF ltd throughout the time,

In this research program we have been given per year amount which BSF ltd has taken from delegating patent and with the high amount of computation we have computed that fair market value of the patent is  A $ 1342.016. This amount is being computed by using present value factors e.g. 8 % and using this following a $ 200 per year inflows has been converted into present value.

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

Journal entries- it is the simple and starting points where all the transaction are recorded for the book keeping purpose. Journal entries are first book which helps company to record valuable transaction in systematical and orderly manner. In this report we will show how the transaction occurred in research and development department is recorded in the primary books of entries of BSF ltd.

Journal entries of Bio-sustainable Feeds (BSF) Ltd., an Australian bio-research firm

Journal entries of amount received by the BSF ltd throughout the 10 years

How and why I valued the patent

In this report BSF ltd has been engaged in developing new product for fished Feeds that were supposed to resolve all the fish feeding problems throughout the time. In this report company has developed a product with the help of research and development department. The cost involved in developing this product is very high coupled with $160 million AUD in research and 200 million AUD in development of the product. Furthermore Commonwealth Scientific and Industrial Research Organization has also given 500 AUD $ grant to the company so that it could take its research proposal further for the betterment of the fish industry.

In order to determine the right amount of fair market value we have used market approach method. There for making right computation of market value of patent I have taken present value factors 8% and consistent inflow from the assignment of patent from the assignee. This both value has helped me to determine accurate market value of the patent. This computation has been shown above in both format named Ms Word and Excel.

The biggest reason to determine the value of the patent is that BFS needs to understand its expenditure and investment amount. Furthermore company in order to enhance the benefit of discovery of research and development department in the public at large has to determine the value of the patent (Hemre, et al., 2011).

Other reasons to come up with the certain price of the product

1. Patent is developed to resolve the fish feeds problem in the environment.
2. Demand of the product in the market is very high which results into various offers to buy the patent authorization to use this product.

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.1 How reasonable is that assertion—support your answer with references to current and recent (e.g. last decade or so) research

BSF Limited which is a bio research company of Australia is been discussed in this report. The discussion will be regarding the problems faced by the company during the research and the value to the society from the research which is being performed by BSF Ltd. The report also contains the fair market value of the patent which is to be done for taking the authority and taking the right to use a product for a particular period. The journal entries will be done for the Research and Development activities of the company which will help in making an understanding on the costs and expenditures of the company on the development of the product.

In the above discussion it is given that BSF LTD has developed a new patent for the betterment of the fishes. The patent value of the same has also drawn with the help of present value factors and inflow which company gets throughout the time. In addition to this it is clear to grasp that company has exclusively developed bacteria based feeds technology which will fill up all nutrition problems in fish. It is also understood that value of the patent has been determined on the production basic and expected selling value in the market. The expected sale value of the patent is the market is determined at AUD 700 million $ whereas with the help of market approach I have compute market value of the patent at 1342.016 AUD $. This market value could be justified with the help of computation made as above (Zhou, et al., 2016).

Reasonable assertion on the fair market value of the patent

In this research program BSF has incurred several expenses such as expenditure on plant based feed AUD 360 million $. Furthermore for more development of this patent or rectification of problems occurred in the patent other investment were made 160 million and 200 million separately on research program. BSF had spent total AUD 500 $ million amount. In addition to this 100 million per year expenses is made by the company develop an alternative aquaculture feed from the research done to date (Sarker, et al., 2016).

It can be concluded from the assignment that BSF Ltd. is starting research on the production of fish feed with the help of bacteria, yeast or algae which is not only good for the health of fishes but also for the environment. Accounting has been done for the research costs and expenditures with the help of journal entries and the fair market value of the patent of the product is calculated which is 1342$ million AUD. In the last part of the report, a Reasonable assertion on the fair market value of the patent is been discussed.

References

"International journal of innovative research & development", 2012, International journal of innovative research & development, [Online], .

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

Hemre, G., Sissener, N.H., Sanden, M., Johannessen, L.E., Krogdahl, Å. & Bakke, A. 2011, "Genetically modified plants as fish feed ingredients", Canadian Journal of Fisheries and Aquatic Sciences, vol. 68, no. 3, pp. 563-574.

Kraugerud, O.F., Jørgensen, H.Y. & Svihus, B. 2011, "Physical properties of extruded fish feed with inclusion of different plant (legumes, oilseeds, or cereals) meals", Animal Feed Science and Technology, vol. 163, no. 2, pp. 244-254.

Lee, K., Rahimnejad, S., Powell, M.S., Barrows, F.T., Smiley, S., Bechtel, P.J. & Hardy, R.W. 2015, "Salmon testes meal as a functional feed additive in fish meal and plant protein?based diets for rainbow trout (Oncorhynchus mykiss Walbaum) and Nile tilapia (Oreochromis niloticus L.) fry", Aquaculture Research, vol. 46, no. 7, pp. 1590-1596.

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-helpreduce-world-hunger.

Nasopoulou, C. & Zabetakis, I. 2012, "Benefits of fish oil replacement by plant originated oils in compounded fish feeds. A review", LWT - Food Science and Technology, vol. 47, no. 2, pp. 217.

Rust, M., Barrows, F., Hardy, R., Lazur, A., Naughten, K., & Silverstein, J. 2011. The Future of Aquafeeds, NOAA/USDA Alternative Feeds Initiative, NOAA Technical Memorandum NMFS F/SPO-124, Retrieved on 11 Jul/16 from: http://www.nmfs.noaa.gov/aquaculture/docs/feeds/the_future_of_aquafeeds_final.pdf.

Sarker, P.K., Kapuscinski, A.R., Lanois, A.J., Livesey, E.D., Bernhard, K.P., Coley, M.L. 2016. Towards Sustainable Aquafeeds: Complete Substitution of Fish Oil with Marine Microalga Schizochytrium sp. Improves Growth and Fatty Acid Deposition in Juvenile Nile Tilapia (Oreochromis niloticus). PLOS ONE, 2016; 11(6), Retrieved on 11, Jul/16 from: http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0156684.

Sugita, H., Mizuki, H. & Itoi, S. 2012, "Diversity of siderophore?producing bacteria isolated from the intestinal tracts of fish along the Japanese coast", Aquaculture Research, vol. 43, no. 4, pp. 481-488.

Zhou, F., Wang, Y., Ding, X., Ng, W., He, F. & Xue, H. 2016;2014;, "Partial replacement of fish meal by soy protein concentrates in diets for a new Japanese strain of juvenile soft?shelled turtle, Pelodiscus sinensis", Aquaculture Research, vol. 47, no. 3, pp. 875-886.