Ch. 9 Goodwill Flashcards
IAS 38 and ASPE 3064
IAS 38 and ASPE 3064
What are the steps in identifying intangibles under IFRS
Must meet the definitition of intangible:
- Asset is identifiable, which is either:
a) separable such that is can be transferred/sold ti another entity
b) arising from contractual or other legal rights - The entity controls the future economic benefits of the asset
- The asset will generate future economic benefits
What are the criterias to recognize an intangible asset?
- it is porbable that the expected future benefit of the asset will flow to the entity
- Cost can be determined reliably
What are two ways that an intangible asset can arise?
- It can be acquired/purcahsed
2. It can be internally generated
If it is acquired, how do you recognize it?
If there is probable expected future economic benefits that will flow to the entity
Cost can be reliably measured
- if its through a business combination, assume to be met if FV can be determined. Cost is the FV at the date of the acquisition
It is usually measured at cost – this can include the direct cost of the purchase as well as non-refundable taxes and any other attributable costs of preparing the asset for its intended use
Note: Goodwill is not considered an identifiable asset and is only allowed to be recognized during combinations
How do government grants tie in?
Sometimes the government will grant a right to something, in that case, the entity can choose to record the asset and the grant GV or at a nominal value + direct expenses to prepare fo ruse
What if you exchange assets and an intangible is part of that asset (non-monetary exchange)
Then the cost will be the FV unless there is no commercial substance or the FV of the asset received or given up can’t be measured. Then it would be the carrying value that is given up.
What about internally generated intangible assets? What do those look like?
These would be development costs.
When are research costs considered development costs?
IAS 28 when they can demonstrate the following:
1) technical feasibility of completing the intangible asset so that it can be available for use
2) its intention to complete the intangible asset or use or sell it
3) its ability to use or sell the intangible asset
4) how the intangible asset will generate proabbel future economic benefits
5) the availability of adequate technical, financial and other resources to complete the development
6) the ability to measure the reliably the expenditures attributable to the intangible asset during the development
What costs can not be deferred into development costs?
training to operating, inefficiencies and operating losses occurred before the asset achieves performance, selling, admin and other OH expenditures
What depreciation methods can you use to depreciate an asset
cost model or revaluation model - once it is selected, it is applied to all the classes
and Amortization (straight-line, diminishing, and units pf production)
What if an intangible asset with an indefinite life is impaired?
They must be tested annually or when there are indicators. They can also be unrecognized when disposed off or when economic benefits can no longe rbe derived. – when not in use
Gain or losses between the net proceeds on disposal and the carrying is recorded.
What are the diffrences between IFRS and ASPE?
ASPE permits people to capitalize or expense development costs.
ASPE does not have specific guidance for government grants
ASPE does not address the review of residual value
Does not require annual impairment tests that ar enot in use
