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Intermediate Accounting > Chapter 5 - Intangible Assets > Flashcards

Chapter 5 - Intangible Assets Flashcards

1
Q

Intangible assets are _____ legal rights or _________ acquired by an enterprise.

A

Long-lived; Competitive advantage

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2
Q

What are the 3 major characteristics of intangible assets? (IPM)

A
  1. Identifiable
  2. No Physical existence
  3. Not Monetary assets
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3
Q

What are 6 “Individually Identifiable” intangible assets? (PTFLCC)

A
  1. Patents
  2. Trademarks
  3. Franchises
  4. Licenses
  5. Copyrights
  6. Computer software
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4
Q

What is the ONLY “Not Individually Identifiable” intangible asset? (G)

A

Goodwill

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5
Q

(Intangible Asset) Account:

Debit: _____, ______
Credit: _____, _____

A

Debit:

  1. Beginning Balance
  2. Acquisition Cost

Credit:

  1. Amortization (cost allocation)
  2. Ending balance (valuation)
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6
Q

(Intangible Asset) Account:

Debit:
FIVE “Acquisition Cost” are: (ICGFS)

A
  1. Individually Identifiable Intangible Asset
  2. Computer Software Development Cost
  3. Goodwill
  4. Franchise
  5. Start-Up Cost
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7
Q

(Individually Identifiable IA) If the asset is purchased from ____, there are no problems

A

Others

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8
Q

(Individually Identifiable IA) If asset is ______ by R&D, then:

  1. US GAAP: Cost should be expensed when _____ because US GAAP prohibits ______ of R&D costs.
  2. Exception (recorded as acquisition cost): _____/consulting fees, ____fees related to defense of asset)
A

Internally developed;

  1. Incurred; Capitalization
  2. Registration; Legal (BUT only for successful lawsuits)
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9
Q

What are 4 examples of “R&D Activity”? (NIPPI)

A
  1. New idea
  2. New product
  3. New Process
  4. Significant improvement in old process
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10
Q

(Computer Software Development Cost (CSDC)) Under IFRS, CSDC is considered as _____

A

Internally generated intangible asset

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11
Q

(CSDC) ______ costs must be expensed, but _______ costs may be capitalized if conditions are met:

  1. CSDC to be _____ or ______
  2. CSDC to be used _____
A

Research; Development

  1. Sold; Leased
  2. Internally
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12
Q

___________ is established upon completion of a detailed program design/working model

A

Technological feasibility

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13
Q

(Goodwill) Goodwill is measured as _______ of consideration (cost of ____) over the _____ of the ________ purchased.

A

Excess; Purchase; Fair value; Identifiable net assets

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14
Q

(Goodwill) Goodwill includes _______ (BKC) that were NOT recorded as ______

A

Brand name, know-how, customer lists; Assets

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15
Q

(Franchise) _______ of initial franchise fees paid/to be paid are recorded as intangible asset (balance sheet), and amortized over the _________ of the franchise.

A

Present value; Expected period of benefit

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16
Q

(Start-up costs) Start-up costa re incurred for ______to start a new operation. They are expensed as _____

A

One-time activities; Incurred

17
Q

(Amortization) For “Individually Identifiable Intangible Asset,” ________ method should be used unless pattern of decrease in value can be identified.

A

Straight-line

18
Q

(Amortization) Individually Identifiable Intangible asset with an ________ is impossible to amortize. (Ex: ______, ______)

A

Indefinite service life; Trademark, Goodwill

19
Q

(Amortization) For “CSDC,” under ______ method, “Sales” are amortized by ____, which is ____ or % of ______

A

U.S. GAAP; Max; SLM; Revenue

20
Q

(Amortization) For “CSDC,” “Internal use” is amortized by ____

A

SLM

21
Q

(Amortization) For Goodwill, there is/is no amortization

A

IS NO

22
Q

(Valuation) What are 3 valuation scenarios for intangible assets? (CRG)

A
  1. Cost Model (same as PPE)
  2. Revaluation Model (Same as PPE IFRS)
  3. Goodwill
23
Q

(Valuation) For “Goodwill,” the 2 methods are: (UI)

US GAAP:

  1. Impairment is calculated at ____ level (an operating segment or one level below) with two steps
  2. 2 Steps: (IM)

IFRS:
1. Goodwill impairment testing is done at ______ level

A

US GAAP; IFRS

US GAAP:

  1. Reporting unit
  2. Impairment; Measurement

IFRS:
1. Cash-generating unit (CGU)

24
Q

Intangible assets can be categorized into ____ and ____.

A

Discernible (identifiable); Undiscernible

25
Q

To determine whether IA (or Inventory, PPE) should initially be recorded as ASSET or EXPENSE, you must determine whether ______ is both _____ and _______

A

Future cash; Probable; Measurable with certainty

26
Q

(IA) In principle, R&D costs should technically be ______

A

Immediately expensed

27
Q

R&D expense is recorded under _______, but CANNOT be recorded _____

A

“Sales and Other Expenses”; Combined

28
Q

In R&D, “research” refers to ____, and “development” refers to _____

A

New idea; new product, processes, significant improvements

29
Q

(R&D) What can be invested for R&D? (RTISCI)

A
  1. Raw materials (recorded in original account, then expensed when used)
  2. Tangible asset (PPI) (recorded in original account, then expensed as depreciation)
  3. Intangible Asset (recorded in original account, then expensed as amortization)
    - ——
  4. Salaries expense (expensed)
  5. Contractual fees (expensed)
  6. Indirect costs (expensed after allocation)
30
Q

(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 ______

A

Technological feasibility; Intangible asset

Revenue; Production; Inventory; Amortized

31
Q

(R&D) Under IFRS, R&D cost will generally be recognized as ______ (asset; capitalized), with a broad condition that _______ is ______ and ________.

A

Development cost; Future cash; Probable; Measurable with certainty

32
Q

(R&D) For CSDC to be used “internally,” during ______ project stage, it will be treated as ________;

After that stage, it will recorded as ______.

A

Preliminary; Administration expense;

Intangible asset (capitalized)

33
Q

“Goodwill” occurs ONLY with ______

A

Consolidations (M&A)

34
Q

(Valuation)

1. Under IFRS, apply ____ between ______ and _______

A

Max; Value in use; NRV

Intermediate Accounting (9 decks)

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