INTANGIBLE ASSETS Flashcards
How do you find the initial cost of intangible asset through separate acquisition?
Purchase Price
Import Duties
Non-Refundable Taxes
DACs
———–
COST
How do you find the initial cost of intangible asset through business combination?
FV on the date of acquisition
How do you find the initial cost of intangible asset through way of deferred payment?
COST HIERARCHY:
1. Cash Price Equivalent
2. PV of the liability
Face Amount - Cost = Unearned Interest Income or Discount
How do you find the initial cost of intangible asset through way of exchange?
COMMERCIAL SUBSTANCE
1. FV of Given Up + cp - cr
2. FV of Received
3. CV of Given Up + cp - cr
LACKS COMMERCIAL SUBSTANCE
CV of Given Up + cp - cr
How do you find the initial cost of intangible asset through government grant?
Fair Value
DACs
————-
Costs
Note: FV can be zero
How do you find the initial cost of intangible asset through internal generation?
M, L, OH
Fees to register a legal right
Amortization of other IA
———————–
Costs
These are not recognized as IA.
- Goodwill
- Brands
- Mastheads
- Publishing Titles
- Customer Lists
These can only be recognized during BUSINESS COMBINATION.
How do you amortize an IA with finite life?
Amortize over UL or Legal Life, whichever is shorter
If LL is renewable, go for UL.
How do you amortize an IA with indefinite life?
IA with indefinite life is
not subject to amortization.
When is an IA impaired?
When CA > RA.
RA is higher between VIU and FVLCTS
How do you find the VIU in finite vs indefinite?
Finite = PV of future cash flows
Indefinite = future cash flows / discount rate
When are subsequent expenditures capitalized and not expensed?
When they enhance future economic benefits of intangible assets.
When do you test for impairment when it comes to finite life IA?
When there is an indication.
When do you test for impairment when it comes to indefinite life IA?
Annually.
In losing a lawsuit for intangible assets, what are the considered expenses?
- Amortization expense
- Legal fees incurred
- CA of the IA derecognized (coz it’s a deduction of asset)
What is the legal life of a patent?
20 years
How do you find the cost of an internally generated patent?
Licensing Cost
Legal Cost
Engineering + Consulting Cost to develop patent
————–
Patent
What are expensed under patent?
Subsequent Legal Costs
R&D Costs
————
Expense
How do you find the cost of patent by purchase?
Purchase Price
Import Duties
Non Refundable Taxes
DACs
—————
Patent
What is the legal life of a trademark?
10 years
What are the costs of a franchise?
Initial Franchise Fee
(Downpayment + PV of Notes payable)
DACs
Legal Fees in connection with acquisition
———-
Franchise
These are the continuing franchise fees.
- Royalties
- % of Revenue
How to find the initial recognition of Goodwill?
Purchase Price
Less: FV of Net Assets
———————-
Goodwill
What is the legal life of copyright?
50 years after death of author
