Intangible assets

Question 1

Purchased goodwill

Answer 1

Consideration paid - fair value of the net assets acquired
Annually reviewed for impairment

Question 2

Amortisation expense

Answer 2

(Cost of asset + fees) / years available to customers
If asset life indefinite, no amortisation but annual review for impairment

Question 3

Total asset value upon acquisition of company

Answer 3

Consideration paid - non-current assets - current assets + current liabilities

Question 4

Measurement of intangible assets

Answer 4

Internally generated goodwill never capitalised
Intangible assets acquired as part of a business combination recognised at fair value if they are separable

Question 5

Recognition of intangible assets

Answer 5

Probable that future economic benefits will flow to the entity
Cost can be measured reliably

Question 6

Identifiability of intangible assets

Answer 6

Separable
Arises from legal rights

Question 7

Intangible asset costs

Answer 7

Purchase price + any directly attributable costs (eg. employee / testing costs, fees)

Question 8

Subsequent measurement of intangible asset costs

Answer 8

Cost model (initial cost - accumulated amortisation and impairment losses)
Use fair value instead of initial cost (revaluation model) only when there is an active market