Intangibles Flashcards
1
Q
Definition of intangible asset criteria
Recognition criteria
A
Definition
- Asset is identifiable
- being separable; it can be transferred/sold to another entity
- arising from contractual or other legal rights
- Entity controls the future economic benefits
- The asset will generate future economic benefits
Recognition:
- probable that future benefits will occur
- Cost can be measured reliably
2
Q
Costs of intangible assets
- Separate acquisition
- Part of business acquisition
- Acquired by gov’t grant
- Exchange of assets
A
Separate acquisition
- Purchase price + non-refundable taxes, any costs to bring to use
Part of business acquisition
- FMV at acquisition date, recognized separately from goodwill.
Acquired by gov’t grant
- have the option to record at FMV, or at nominal value + direct expenses to prepare for use
Exchange of assets
- Cost = FMV unless:
- transaction lacks commercial substance, OR
- FMV of asset received/given up cannot be measured reliably
-> then neasured @ CV of asset given up.
3
Q
Research
A
costs associated with this phase are expensed because during the entity cannot demonstrate that the expenditures will reuslt in a future benefit
Examples of items in this phase:
- obtaining new knowledge of a market
- looking for, evaluating, and selecting research findings
- determining alternatives for new processes and techniques
4
Q
Development: capitalization criteria
A
IAS 38: the entity must demonstrate: IAS 38.57
- is it possible to complete the development of the asset?
- does the company intend to complete it?
- once completed, how will the asset be used/sold?
- can they demonstrate the existence of a market for the output of the intangible asset or the usefulness of it if used internally?
- do they have available funds/resources to complete the asset?
- can the costs that are directly attributable to the development of the asset be measured reliably?
5
Q
Finite life vs Indefinite
A
Finite - amortized (reviewed at least annually)
- choose between the cost model and revaluation model
Indefinite - not amortized
- assessed annually for impairment
6
Q
ASPE
A
has a choice to capitalize or expense development costs.
IFRS must capitalize
