Ch. 9 - Goodwill and Intangible Assets

Question 1

Intangible Asset - Definition

Answer 1

1. The asset is identifiable:
   a) can be sold or transferred
   b) arising from contractual or other legal rights
2. The entity controls the future economic benefits
3. the asset will generate future economic benefits

Question 2

Intangible Asset - Recognition Criteria

Answer 2

1. It is probable that expected economic benefits will flow to the entity
2. The costs can be measured reliably

Question 3

Intangibles received through government grant - options to record

Answer 3

1. record at fair value

2. record at nominal value plus expenses to prepare for use

Question 4

Goodwill - circumstances to record

Answer 4

Goodwill is only recorded upon business combination - never record internally generated goodwill

Question 5

Intangible assets acquired through exchange of non-monetary items - how to record

Answer 5

record at FV unless:
a) the transaction lacks commercial substance, or
b) neither FV can be measured reliably
then record at carrying value of asset given up

Question 6

Internally generated intangible assets - two phases

Answer 6

1. Research

2. Development

Question 7

Internally generated intangible assets - Research cost treatment

Answer 7

expense all research costs

Question 8

Internally generated intangible assets - Development criteria

Answer 8

1. technical feasibility
2. intention to complete
3. ability to use/sell asset
4. generate economic benefit
5. available resources to complete
6. ability to measure costs

Question 9

Intangible Assets and Goodwill IAS #

Answer 9

38

Question 10

IAs with finite lives - models available

Answer 10

1. cost

2. revaluation

Question 11

IAs with finite lives - amortization methods available

Answer 11

1. straight line
2. diminishing balance
3. units of production

Question 12

IAs with indefinite lives - amortization

Answer 12

not amortized but reviewed for impairment at least annually

Question 13

ASPE - development cost treatment

Answer 13

Allowed the option to expense or capitalize, while IFRS requires capitalization