Chapter 9 - Intangible Assets

Question 1

IAS 38 intangible assets defines intangible asset as what?

Answer 1

An identifiable non- monetary asset without physical substance

Question 2

An asset is identifiable if..?

Answer 2

It is separable or
It arises from contractual or other legal rights

Question 3

How can intangible assets be consumed?

Answer 3

Purchased or internally generated

Question 4

As a general rule, purchased intangible assets are what?

Answer 4

Capitalised

Question 5

As a general rule internally generated intangible assets are what?

Answer 5

Not recognised in the financial statements

Question 6

What are some examples of intangible assets?

Answer 6

Goodwill, development costs, brands

Question 7

What is the criteria to recognise an intangible asset in the financial statements?

Answer 7

• it should meet the definition of an intangible asset
• the cost of the asset can be realiably measured
• it is probable that future economic benefits will be received by the entity from the asset

Question 8

What does IAS 38 define research as?

Answer 8

Original and planned investigation undertaken with the prospect of gaining new scientific or technical knowledge and understanding

Question 9

How much all research expenditure be dealt with?

Answer 9

All must be written off to the SPL as it in incurred

Question 10

How is development costs defined?

Answer 10

The application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use

Question 11

How must development costs be dealt with?

Answer 11

Must be capitalised as an intangible asset in the SFP provided on specific criteria

Question 12

What is the specific criteria a development cost must pass?

Answer 12

Separate project
Expenditure identifiable and reliably measured
Commercially viable
Technically feasible
Overall profitable
Resources available to complete

Question 13

What does IAS 38 define amortisation as?

Answer 13

The depreciable amount of an intangible asset with a finite useful life shall be allocated on a systematic basis over its useful life

Question 14

When should an intangible asset not be amortised?

Answer 14

If it has an indefinite life

Question 15

What happens with an intangible asset with an indefinite life?

Answer 15

Subject to an annual impairment review to ensure that it’s carrying amount in the financial statements does not exceed its recoverable amount

Question 16

What is subsequent treatment?

Answer 16

Each project should be reviewed at the y/e to ensure that the ‘SECTOR’ criteria is still met. If no longer met the previously capitalised expenditure must be written off to the SPL

Question 17

What is the diff between tangible and intangible assets?

Answer 17

Tangible you can physically touch intangible you cannot

Question 18

Can you amortise an Infinite intangible asset?

Answer 18

No

Question 19

The financial statements should disclose what for capitalised development?

Answer 19

The amortisation method used and the i period of amortisation
A reconciliation of the carrying amounts at the beg and at the end of the period
Amortisation charged during period
Total amount of research and development expenditure recognised as an expense during the period

Question 20

Which measurement base should be used when recording the initial purchase or construction of intangible assets?

Answer 20

Historical