Goodwill & Intangible Assets

Question 1

Examples of intangible assets

Answer 1

copyrights
patents
franchise rights
trademarks
customer lists

Question 2

IFRS intangible asset definition criteria

Answer 2

1. identifiable
2. a. separable such that it can be transferred/sold
3. b. arising from contractual or other legal rights
4. the entity controls the future economic benefits of the asset
5. the asset will generate future economic benefits

Question 3

IFRS criteria to recognize intangible asset

Answer 3

1. it is probably that the expected future economic benefit of the asset flows to the entity
2. its cost can be measured reliably

Question 4

Under ASPE, are development costs capitalized or expensed?

Answer 4

Either, ASPE gives the choice

Question 5

True or false: annual impairment tests are required on intangibles that are not in use.

Answer 5

IFRS: True
ASPE: False

Question 6

Under IFRS, which of the following can be capitalized as an intangible asset?

a) internally generated goodwill
b) internally developed brands
c) overhead costs directly related to development activities
d) borrowing costs related to research activities

Answer 6

c)overhead costs directly related to development activities

Question 7

Which of the following costs related to the development of a new software program are eligible to be capitalized?
legal fees
general advertisement & promotion costs
general admin & overhead
staff software training
cost of materials
fees to register proper legal rights
research phase costs

Answer 7

legal fees
cost of materials
fees to register legal rights

Question 8

True or false: residual value is an important component used in calculating amortization expense of a trademark

Answer 8

False. Trademarks are not actively traded, the residual value will be nil