Intangibles Flashcards
R and D
Expense immedietly
Indications for impairment
Cost Factors,financial performance, entity’s cash flow, macroeconomic conditions,environemnt
Fair value approach
Can be arrived by one of the approaches-Market, Income, Cost.
impairment methods
Straight line, Units of sale, NRV
Goodwill
Expenses
cash
Steps in Impairment-Goodwill
Carrying Value>F.V=Impairment loss
Fair value of net assets vs fair value of reporting unit=implied goodwill
Goodwill for non -public entities
One step process 10 years straight line depriciation
Amortization of Intangibles
Straight line,Units of sale,Net reliazable value
Goodwill for public entities
10 years of amortization
Software Costs- For beginning upto technological feasibility
R and D
How Goodwill is assigned
In a business combination Goodwill is assigned to one or more reporting units. A reporting segment may be operzting segment or one level below
can goodwill be recorded internally
A company cannot record Goodwill internally the internal cost of developing or restoring it.
R and D expense
Rand D expense=Program,design,coding and testing
Software Costs
Coding and testing
duplication training materials packaging
production costs
the earnings of sinking fund
ordinary income
Intangibles under IFRS
Identifiable intangibles that lack physical substance under IFRS are recognized.
Under IFRS how impairment loss is treated
Impairment loss is recognized in the period incurred
If the asset is accounted for under the CM,the impairment is recognized under profit or loss. If the asset is accounted for under RM the impairment loss is a revaluation decrease.
