F3/M7 Intangibles Flashcards
(T/F): Under U.S. GAAP, internally developed intangibles (R&D) are expensed
True; exceptions;
- Legal fees related to defending the asset
- Registration fees
- Design costs (Trademark)
- Other direct costs to secure the asset
(T/F): Purchased intangibles are capitalized
True
(T/F): Under IFRS, you can capitalize R&D if technological feasibility is reached.
True
How to measure the Capitalization of Costs for intangibles purchased
- amount of cash given / FV of assets given
- PV of liabilities assumed
- FV of consideration received for stock issued
(T/F): If the intangible item has a finite life, it should be amortized
True
(T/F): A patent is amortized over the shorter of its remaining useful life or its remaining legal life
True
(T/F): Sell an intangible asset = recognize G/L
True
(T/F): Under IFRS, intangibles can be reported at either the cost model or the revaluations model
True
(T/F): A franchisee reports the amount paid for Initial Franchisee Fees as an intangible asset and amortizes it over the life of the franchise. Continuing franchisee fees are expensed
True
(T/F): Start up costs are expensed
True
- Formation of an organization (legal fees)
- Legal fees to obtain patent
When to not directly expense R&D costs
- Materials, facilities, or equipment have alternative future uses, and should be depreciated over their useful lives.
- Projects undertaken on behalf of other should report R/D expense as Cost of Sales
(T/F): Routine periodic design changes to old products are considered R&D expenses
False
(T/F): Depreciation of equipment used for R&D should be included as an expense of R&D
True
2 Ways to amortize capitalized computer software design costs
Straight line
Percentage of Revenue
(T/F): If you purchase equipment for the sole purpose of using it for R&D, you do not capitalize the equipment and instead expense as R&D
True
