Goodwill and intangible assets - ASPE 3064

Question 1

Internally generated intangible assets – R&D (ASPE)

Answer 1

• Research costs are always expensed when incurred
• Accounting policy choice to either capitalize or expense development costs
• Development costs can be capitalized if all of the following exist:
  o Technically feasible
  o Intention to complete it
  o Ability to use or sell it
  o Availability of adequate technical, financial and other resources to complete the development
  o Ability to reliably measure the expenditures attributed
  o Probable future economic benefits will be generated

Reference: ASPE 3064.37, .40, .41

Question 2

Goodwill and intangible assets – Amortization (ASPE)

Answer 2

• Intangibles are to be amortized over their estimated useful lives unless they are considered to have an indefinite life
• Assets with indefinite lives are not to be amortized until the life is no longer considered indefinite (however it must still be tested for impairment)
• Amortization method and useful life should be reviewed annually
• The expected useful life must consider:
  o expected use of the asset,
  o expected useful life of related assets,
  o contractual, legal and regulatory provisions and other economic factors

Reference: ASPE 3064.56, .57, .61

Question 3

Intangible assets (ASPE)

Answer 3

• In order to meet the definition of an intangible asset, assets must meet the identifiability, control, and future economic benefits tests.
• An asset meets the identifiability criterion in the definition of an intangible asset when it:
  o is separable, or
  o arises from contractual or other legal rights
• An entity controls an asset if the entity has the power to obtain the future economic benefits flowing from the underlying resource and to restrict the access of others to those benefits.
• An intangible asset shall be recognized if, and only if:
  o it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and
  o the cost of the asset can be measured reliably.

Reference: ASPE 3064.12, .13, .21