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Question 1

when should an exchange be measured based on the reported amount of nonmonetary asset surrendered?

Answer 1

when the transaction lacks commercial substance

Question 2

for GAAP, what is the policy for reversal of a prev. recog’d IL?

Answer 2

it is prohibited

Question 3

how should a company report GW in the CY when they had GW in their BS PY?

Answer 3

at RU level, when FV < CV, loss on impairment is booked (Dr) and reduce GW (Cr)

Question 4

when should the recoverability test be used for intangibles?

Answer 4

only for limited life intangibles such as patents

• the test compares undiscounted FCF to CV. if CV> FCF, a FV test will be performed

Question 5

what is undiscounted FCF?

Answer 5

it is also known as expected FCF; if undiscounted FCF > CV, no IL is recorded

Question 6

under IFRS, how is IL recorded?

Answer 6

whenever CV > recoverable amount

• recoverable amt = GREATER of NRV or PV FCF

Question 7

when should a long-lived asset be tested for recoverability?

Answer 7

at least annually or whenever events changes in circumstances indicating the CV may not be recoverable

Question 8

how are IL shown on the IS?

Answer 8

as a component of income from cont. op’s (before tax)

Question 9

How is GW cap’d?

Answer 9

as a component of the other entity (PP only)

Question 10

what is included in R&D exp?

Answer 10

R&D contracted out to 3rd pty, preproduction design/testing/constr costs, and DE for the CY from the equipment w/ alt. future uses (dep. over est. UL) (+redesign of a product prerelease)

• engineering costs are NOT R&D, and neither are legal fees
• routine design of tools etc is mfg. cost

Question 11

how is a limited life IA amortized?

Answer 11

over its ECON life, NOT UL

Question 12

what is cap’d under patents?

Answer 12

VAT (sales) taxes, legal fees and other costs assoc’d with registering a patent

Question 13

when is software dvp. exp’d?

Answer 13

before dvp. stage and during prelim project stage. costs of training employees and DE are also included in exp. (internal costs expensed too)

Question 14

how are costs of start-up activities (org. costs) treated? (under GAAP)

Answer 14

they are exp’d as incurred

Question 15

what is the treatment for when a patent has been permanently impaired?

Answer 15

loss is equal to its carrying amount recorded and charged to income

Question 16

under IFRS, can dvp. costs be cap’d if certain criteria are met?

Answer 16

yes; if the patent has been granted, it is gen. approp. to cap. the related design costs

Question 17

what is the treatment for legal costs for successful defense of a patent?

Answer 17

it is cap’d to patent cost

• UNSUCCESSFUL legal costs are exp’d immediately

Question 18

when can you cap. computer software costs?

Answer 18

when the software is dvp’d to be sold, leased, or licensed once it reaches tech. feasability and has been estab’d
(includes costs of producing product masters for training mat’s)

• costs will continue to be cap’d til software released for sale

Question 19

what rule lies under the IFRS reval. model?

Answer 19

if one asset within a class is accounted for using this model, then ALL assets within the same class must follow this model

Question 20

under IFRS, what is the treatment of GW?

Answer 20

GW CANNOT be recog’d as an asset if it is internally generated (exp’d)