Intangible Assets

Question 1

Computer Software to be sold (Technological Feasibility)

Answer 1

Up to TF = Research & Development = Expense

After TF = Capitalize = Report as Intangible Asset

Question 2

During an Acquisition - In process R&D Expenses are

Answer 2

Capitalized by the Acquiring Company and reported at FV

Question 3

What number is used to capitalize intangible asset?

Answer 3

Higher of the percentage of sales (32%) or Straight line depreciation rate. (5 years = 20%)

Question 4

Acquisition of Long Lived assets with alternative use vs no alternative use.

Answer 4

No Alternative use = Expense entire amount

Alternative use = Expense current year depreciation

Question 5

Acquisition of a Patent from another party

Answer 5

All normal and necessary costs are capitalized

Question 6

When something is attached to a leased building it becomes part of the building so the company owns it. If you are unsure whether a company is going to take an option

Answer 6

Amortization of the leasehold improvement will be taken over the life of the lease.

Question 7

During an acquisition - an intangible asset is reported at fair value ONLY if

Answer 7

It can be separated and sold OR

If The company has contractual rights to it

Question 8

Organization and Start up costs

Answer 8

are expensed when incurred