Chapter 13 - Intangible assets Flashcards
What is an intangible asset?
Identifiable, non monetary asset
No physical substance
What are some examples of intangible assets?
Patent/Copyright
License
Brand names
Trademarks
What does IDENTIFIABLE asset mean?
separate disposal
from contractual/legal rights
What CRITERIA is needed for an intangible asset to be recognized?
- probable economic benefits will flow through
- cost measured reliably
3 types of intangible asset?
Separate acquisition
Internally generated
Part of business acquisition
What type of intangible assets are Research and Development?
Internally generated intangibles
What is the accounting treatment of Research?
expense in P/L
do distant from commercial production = economic benefits not probable
What are developmental costs?
Application of research findings
When is the recognition criteria for DEVELOPMENT costs to be CAPITALISED?
ALL of them!!!!
- completion of asset is technically feasible
- intention to complete/use/sell asset
- asset can be used/sold
- asset generates future economic benefits
- adequate resource to complete asset
- expenditure on asset reliably measured
How to account for intangible assets acquired as part of BUSINESS COMBO?
in consolidated F/S at fair value
What is the INITITAL measurement?
Purchase price + Directly attributable costs
What are the two models intangible assets can be SUBSEQUENTLY measured?
Cost
Revaluation
(minus accum amortisation, minus impairment)
When can you use REVALUATION model for SUBSEQUENT measure?
if active market:
- items are homogenous
- buyers and sellers found at any time
- prices available to public
(only licenses and quotas really)
When should you start amortising the intangible asset?
When it is available for use.
When amortising, the residual value is zero UNLESS:
- a third party is buying
- active second hand market that can workout residual value
