INTANGIBLE ASSETS Flashcards
Provide examples of the class of assets can you carry at fair market value under IFRS?
Property, plant, and equipment; identifiable intangible assets; financial assets including investments and financial instruments.
How much of the impairment loss can be recovered under IFRS?
The recovery of an impairment loss is limited to the carrying value had the impairment not occurred.
At what level is goodwill impairment testing performed under U.S. GAAP and IFRS?
Under U.S. GAAP, goodwill impairment is tested at the reporting unit level. Under IFRS, goodwill impairment is tested at the cash generating unit.
Under IFRS, at what value can you report intangible assets?
Amortized cost or fair market value.
When can impairment of an intangible be recovered?
Impairment of an indefinite or definite life intangible CANNOT be recovered.
What is the impairment test for indefinite life intangibles?
One step: BV compared to FV. If BV > FV then impairment loss = BV - FV.
What is the impairment test for definite life intangibles?
Two steps: 1. The book value (BV) of the definite life intangible is compared to the recoverable cost (RC) of the intangible asset. If the BV > than the RC then 2. BV compared to fair value (FV). If BV > FV then impairment loss = BV - FV.
What method is used to amortize intangible assets?
Straight line, unless another systematic method can be shown as more appropriate.
What costs can be capitalized to an intangible asset?
Price paid to other parties.
What are intangible assets?
Long-term operational assets that lack physical substance or presence but are currently used in the operation of a business and have a useful life extending more than one year from the balance sheet date.
List the types of intangibles
Marketing Related, Customer Related, Artistic Related, Contract Related, Technology Related, Goodwill.
List the classifications of intangible assets.
Definite life intangibles, indefinite life intangibles.
How is amortization of definite life intangibles recorded?
Debit amortization expense and credit the intangible asset (there is no accumulated amortization contra account as with tangible assets).
Under what conditions is the residual value of a definite life intangible not assumed to be zero?
When 1) the entity has a commitment from a third party to purchase the intangible asset at the end of its useful life; or 2) the residual value can be determined by reference to an exchange transaction in an existing market for that asset and that market is expected to exist at the end of the asset’s useful life.
