Intangible Non-Current Assets Flashcards
1
Q
Intangible Assets
A
- identifiable non-monetary asset without physical substance
- it can’t be touched
2
Q
Examples of Intangible Assets (6)
A
- computer software
- licenses - to carry out activities/operate in location
- customer lists - if bought from another business
- franchise
- development expenditure
- goodwill
3
Q
Research Definition
A
- original/planned investigation
- undertaken with prospect of gaining new scientific/technical knowledge/understanding
4
Q
Development Definition
A
- application of research findings/other knowledge
- to plan/design for production of new/improved materials
devices
products
processes
systems
services - prior to commencement of commercial production/use
5
Q
Amortisation
A
- systematic allocation of depreciable amount of an intangible asset over its useful life
6
Q
Depreciable amount
A
- cost of asset/other amount substituted for cost
- less residual value
7
Q
Useful Life
A
- period over which asset is expected to be available for use by entity
- number of production units expected to bye obtained from asset
8
Q
Research examples from IAS 38
A
- activities aimed at obtaining new knowledge
- search for applications of research findings
- search for product/process alternative
- formulation/design of possible new/improved product/process
9
Q
Development examples from IAS 38
A
- design, constructions, testing of prototypes/models
- design of tools, jigs, moulds, dies with new technology
- design/operation of pilot plant
- testing of chosen alternative for new/improved materials
10
Q
What costs can be included with Research and Development?
A
- any directly attributable
- salaries of personnel engaged in R&D
- cost of materials
- depreciation of assets used
- overhead costs can be allocated
- amortisation of patents/licenses
11
Q
How should research costs be recognised in statements?
A
- expense in period they are incurred
- in Statement of Profit/Loss
- at this point toon much uncertainty of economic future value
12
Q
What criteria mean that development expenditure must be recognised as intangible asset?
A
- PIRATE
Probable future economic benefits (existence of external market/use within entity) - Intention to complete/use or sell
- Resources (technical/financial) to complete development and use/sell
- Ability to use/sell
- technical feasibility of completing
- expenditure attributable can be measured reliably
13
Q
What should the development costs not exceed?
A
- carrying amount of intangible NCA not excess amount that it is probable will be recovered from related future economic benefits
- after decussating further development/production/selling costs
14
Q
What is the double entry for Amortisation?
A
Dr Amortisation Expense (SoP/L) increase expense
Cr Accumulated amortisation (SoFP) decrease asset
15
Q
What should be included in reconciliation of intangible assets in statements?
A
- carrying amounts at begin/end of period
- movement including
additions
disposals
reductions in CA
amortisation
