Intangible Asset Flashcards
How is purchased intangible assets recorded?
- At cost as an asset
- Capitalize legal and registration fees
How is internally developed intangible assets accounted for under US GAAP? What is the exceptions of the rule?
- Under US GAAP, it should be expensed not capitalized
- US GAAP prohibits the capitalization of research and development costs
- Certain costs can be capitalized
1. Legal fee and other costs related to a successful defense of the asset
2. Registration or consulting fees
3. Design costs
4. Other direct costs to secure the asset
How is internally developed intangible assets accounted for under IFRS?
-Research costs related to an internally developed intangible asset must be expensed
- But under following conditions, it can be capitalized
1. Technological feasibility has been established
2. The entity intends to complete the intangible asset
3. The entity has the ability to use or sell the intangible asset
4. The intangible asset will generate future economic benefits
5. Adequate resources are available to complete the development and sell or use the asset
How is intangible asset amortized
-shorter of its estimated life or remaining legal life
What method should be used?
-S/L method should be used
How is amortization done when there was a change in useful life of intangible asset?
- Recalculate amortization
- Remaining NBV is amortized over the new remaining life
How is intangible asset reported under IFRS?
- Either the cost model or the revaluation model
How is intangible asset accounted for under cost model?
- Reported at cost adjusted for amortization and impairment
How is intangible asset accounted for under revaluation model?
- Initially recognized at cost and then revalued to FV at a subsequent revaluation date
- Revaluation model carrying value = FV on revaluation date - Subsequent amortization - subsequent impairment
How is revaluation losses reported?
-Reported on the I/S
How is revaluation gains reported?
-Reported on the OCI
