Chapter 5 - Intangible Assets Flashcards
Intangible assets are _____ legal rights or _________ acquired by an enterprise.
Long-lived; Competitive advantage
What are the 3 major characteristics of intangible assets? (IPM)
- Identifiable
- No Physical existence
- Not Monetary assets
What are 6 “Individually Identifiable” intangible assets? (PTFLCC)
- Patents
- Trademarks
- Franchises
- Licenses
- Copyrights
- Computer software
What is the ONLY “Not Individually Identifiable” intangible asset? (G)
Goodwill
(Intangible Asset) Account:
Debit: _____, ______
Credit: _____, _____
Debit:
- Beginning Balance
- Acquisition Cost
Credit:
- Amortization (cost allocation)
- Ending balance (valuation)
(Intangible Asset) Account:
Debit:
FIVE “Acquisition Cost” are: (ICGFS)
- Individually Identifiable Intangible Asset
- Computer Software Development Cost
- Goodwill
- Franchise
- Start-Up Cost
(Individually Identifiable IA) If the asset is purchased from ____, there are no problems
Others
(Individually Identifiable IA) If asset is ______ by R&D, then:
- US GAAP: Cost should be expensed when _____ because US GAAP prohibits ______ of R&D costs.
- Exception (recorded as acquisition cost): _____/consulting fees, ____fees related to defense of asset)
Internally developed;
- Incurred; Capitalization
- Registration; Legal (BUT only for successful lawsuits)
What are 4 examples of “R&D Activity”? (NIPPI)
- New idea
- New product
- New Process
- Significant improvement in old process
(Computer Software Development Cost (CSDC)) Under IFRS, CSDC is considered as _____
Internally generated intangible asset
(CSDC) ______ costs must be expensed, but _______ costs may be capitalized if conditions are met:
- CSDC to be _____ or ______
- CSDC to be used _____
Research; Development
- Sold; Leased
- Internally
___________ is established upon completion of a detailed program design/working model
Technological feasibility
(Goodwill) Goodwill is measured as _______ of consideration (cost of ____) over the _____ of the ________ purchased.
Excess; Purchase; Fair value; Identifiable net assets
(Goodwill) Goodwill includes _______ (BKC) that were NOT recorded as ______
Brand name, know-how, customer lists; Assets
(Franchise) _______ of initial franchise fees paid/to be paid are recorded as intangible asset (balance sheet), and amortized over the _________ of the franchise.
Present value; Expected period of benefit
(Start-up costs) Start-up costa re incurred for ______to start a new operation. They are expensed as _____
One-time activities; Incurred
(Amortization) For “Individually Identifiable Intangible Asset,” ________ method should be used unless pattern of decrease in value can be identified.
Straight-line
(Amortization) Individually Identifiable Intangible asset with an ________ is impossible to amortize. (Ex: ______, ______)
Indefinite service life; Trademark, Goodwill
(Amortization) For “CSDC,” under ______ method, “Sales” are amortized by ____, which is ____ or % of ______
U.S. GAAP; Max; SLM; Revenue
(Amortization) For “CSDC,” “Internal use” is amortized by ____
SLM
(Amortization) For Goodwill, there is/is no amortization
IS NO
(Valuation) What are 3 valuation scenarios for intangible assets? (CRG)
- Cost Model (same as PPE)
- Revaluation Model (Same as PPE IFRS)
- Goodwill
(Valuation) For “Goodwill,” the 2 methods are: (UI)
US GAAP:
- Impairment is calculated at ____ level (an operating segment or one level below) with two steps
- 2 Steps: (IM)
IFRS:
1. Goodwill impairment testing is done at ______ level
US GAAP; IFRS
US GAAP:
- Reporting unit
- Impairment; Measurement
IFRS:
1. Cash-generating unit (CGU)
Intangible assets can be categorized into ____ and ____.
Discernible (identifiable); Undiscernible
To determine whether IA (or Inventory, PPE) should initially be recorded as ASSET or EXPENSE, you must determine whether ______ is both _____ and _______
Future cash; Probable; Measurable with certainty
(IA) In principle, R&D costs should technically be ______
Immediately expensed
R&D expense is recorded under _______, but CANNOT be recorded _____
“Sales and Other Expenses”; Combined
In R&D, “research” refers to ____, and “development” refers to _____
New idea; new product, processes, significant improvements
(R&D) What can be invested for R&D? (RTISCI)
- Raw materials (recorded in original account, then expensed when used)
- Tangible asset (PPI) (recorded in original account, then expensed as depreciation)
- Intangible Asset (recorded in original account, then expensed as amortization)
- —— - Salaries expense (expensed)
- Contractual fees (expensed)
- Indirect costs (expensed after allocation)
(R&D) Computer Software Development Cost incurred will only be recognized as asset (capitalized) ONLY when it has reached _________. When it does, it will be recognized as ______.
When the CSDC is able to generate ______ and reaches _____ stage. When it does, it will be recognized as _______. It will also have to be ______
Technological feasibility; Intangible asset
Revenue; Production; Inventory; Amortized
(R&D) Under IFRS, R&D cost will generally be recognized as ______ (asset; capitalized), with a broad condition that _______ is ______ and ________.
Development cost; Future cash; Probable; Measurable with certainty
(R&D) For CSDC to be used “internally,” during ______ project stage, it will be treated as ________;
After that stage, it will recorded as ______.
Preliminary; Administration expense;
Intangible asset (capitalized)
“Goodwill” occurs ONLY with ______
Consolidations (M&A)
(Valuation)
1. Under IFRS, apply ____ between ______ and _______
Max; Value in use; NRV
