IAS38 - Intangible Assets

Question 1

IAS38?

Answer 1

prescribes accounting treatment for intangible assets

Question 2

scope of IAS38?

Answer 2

• intangible assets
• financial assets

Question 3

does goodwill acquired in a business combination class as intangible asset?

Answer 3

no

Question 4

amortisation?

Answer 4

the systematic allocation of the depreciable amount of an intangible asset over its useful life

Question 5

an asset is a resource that is…

Answer 5

• controlled by an entity as a result of past events
• will provide future economic benefits

Question 6

development?

Answer 6

the application of research to design new materials, products etc

Question 7

entity-specific value?

Answer 7

the present value of the cash flows an entity expects to arise from the continuing use of an asset

AKA VIU

Question 8

impairment loss?

Answer 8

the amount by which the carrying amount exceeds the recoverable amount

Question 9

intangible asset?

Answer 9

an identifiable non-monetary asset without physical substance

Question 10

monetary assets?

Answer 10

money held and assets equivalent to money

Question 11

research?

Answer 11

planned investigation undertaken with the prospect of gaining new knowledge

Question 12

useful life?

Answer 12

• the period over which an asset is expected to be available for use by an entity
• the number of production units expected to be obtained from the asset by the entity

Question 13

what makes an intangible asset identifiable?

Answer 13

if it is:
- separable
- arises from contractual or other legal rights

Question 14

when does an entity control an intangible asset?

Answer 14

when they have power to obtain future economic benefits flowing from the asset

e.g., a patent

Question 15

an intangible asset can be recognised if, and only if…

Answer 15

• probable that future economic benefits will flow
• the cost can be measured reliably

Question 16

cost of a separately acquired intangible asset comprises of…

Answer 16

purchase price & directly attributable costs

Question 17

how are IA recognised when part of a business combo?

Answer 17

intangible assets are recognised at their fair value

Question 18

accounting treatment for reasearch/development?

Answer 18

research = expensed in P&L

development = capitalised as long as it meets 6 criteria

Question 19

internally generated goodwill?

Answer 19

NOT recognised as an asset

Question 20

measurement of IA after recognition?

Answer 20

cost model or revaluation model

Question 21

cost model?
revaluation model?

Answer 21

cost = cost less accum. amortisation less accum. impairment

revaluation = fair value less accum. amortisation less accum. impairment loss

Question 22

two types of useful lives for IA?

Answer 22

finite and indefinite

finite = amortised over its useful life, residual amount is 0

indefinite = no useful life, no residual amount, only impairment, no amortisation

Question 23

how is a change from finite to indefinite useful life accounted for?

Answer 23

prospectively as a change in accounting estimate

Question 24

infinite = indefinite?

Answer 24

no

infinite = endless

indefinite = we are not sure

Question 25

how often should useful life be reassessed?

Answer 25

after each financial year

Question 26

disclosures relating to IAS38?

Answer 26

• distinguish between internally generated goodwill and other intangible assets
• whether useful life’s finite or indefinite
• the amortisation method used
• the carrying amount
• reconciliation of carrying amount at the beginning/end of each period