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FAR (Theories only) > Intangible Assets > Flashcards

Intangible Assets Flashcards

1
Q

Identifiable non-monetary asset without physical substance

A

Intangible asset

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2
Q

Three (3) essential criteria for intangible asset

A

Identifiability
Control
Future economic benefits

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3
Q

When can an intangible asset be recognized?

A
  1. Probable that future economic benefits attributable to the asset will flow to the entity; and
  2. Cost of the intangible asset can be measured reliably
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4
Q

Initial measurement of intangible asset

A

@ Cost

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5
Q

Research costs (or costs incurred in research phase) are recognized as:

A

Expense

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6
Q

Intangible assets arising from development shall be recognized if and only if an entity can demonstrate:

A
  1. Tech. feasibility of completing the asset
  2. Intention to complete and use/sell intangible asset
  3. Ability to use or sell the intangible asset
  4. How intangible asset will generate probable future economic benefits
  5. Availability of adequate, technical, financial and other resources to complete development and to sell/use the asset
  6. Ability to measure reliably expenditure attributable to intangible asset
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7
Q

If entity cannot distinguish research phase from development phase, the treatment is

A

Research phase (expensed)

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8
Q

When do R&D expenses typically occur?

A

Beginning of commercial production and distribution

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9
Q

Subsequent measurement of intangible asset

A

Cost or revaluation model

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10
Q

When can revaluation model be used for subsequent measurement of intangible assets?

A

If there is an active market for the intangible asset

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11
Q

Residual value of an intangible asset is presumed to be

A

Zero (0)

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12
Q

When can the residual value of an intangible asset not be zero?

A
  1. There is a commitment by a 3rd party to purchase the asset at end of its useful life; or
  2. There is an active market for the asset and:
    * Residual value can be determined by reference to that market; and
    * It is probable that such market will exist at end of the asset’s useful life
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13
Q

Expenditures on an intangible asset shall be recognized as

A

Expense

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14
Q

Government-granted license conferring the sole right to an inventor to exclude others from making, using or selling an invention

A

Patent

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15
Q

Cost of internally developed patent

A
  1. Licensing
  2. Other related legal fees in securing patent rights
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16
Q

Amortization of patent acquired by purchase

A

Shorter of:

  1. Remaining legal life; or
  2. Useful life
17
Q

Amortization of patent that is developed internally

A

Shorter of:

  1. Legal life; or
  2. Useful life
18
Q

Amortization of competitive patent to protect original patent

A

Competitive patent: Remaining life of old patent

19
Q

Amortization of an acquired related patent to extend life of old patent

A

Related patent + unamortized cost of old patent = extended life

20
Q

Amortization of an acquired related patent which does not extend life of patent/s

A

Old patent: remaining useful life
New patent: own useful life

21
Q

Legal life of a patent

A

20 years

22
Q

Treatment for cost of litigation

A

Expensed (whether successful or not)

23
Q

If litigation is unsuccessful, the treatment of old patent is

A

Written off as loss

24
Q

Distinctive design, symbol, or name that uniquely identifies a product

A

Trademark

25
Q

Legal life of trademark that has a definite useful life

A

10 years, renewable for periods of 10 years each

26
Q

Amortization of a trademark that has a definite life

A

Shorter of:

  1. Useful life; or
  2. Legal life
27
Q

Impairment of a trademark with definite life

A

Tested when there is an indication of impairment at end of reporting period

28
Q

Impairment of a trademark with indefinite life

A
  1. At least annually; and
  2. Whenever there is an indication of impairment
29
Q

Treatment of cost of litigation for trademark

A

Expensed

30
Q

If litigation is unsuccessful, what is the treatment of trademark?

A

Written off as loss

31
Q

Government-granted license or right to an author, composer, or artist enabling them to publish, sell, or otherwise benefit from literary, musical or artistic work

A

Copyright

32
Q

Cost of copyright

A

Expenditures in production of work (incl. those required to establish or obtain the right)

33
Q

Legal life of a copyright

A

Life of author and for 50 years after death

34
Q

Right granted by party to another party to sell its products using the former’s name

A

Franchise

35
Q

Treatment of continuing franchise fee or periodic payment

A

Outright expense

36
Q

Amortization of franchise

A

Period stated in agreement

37
Q

Database containing the names, contact information, order history, other relevant information for a list of customers

A

Customer list

38
Q

Costs incurred in generating the customer list shall be:

A

Expensed

FAR (Theories only) (6 decks)

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