Intangibles_Classification

Question 1

purchased intangibles

Answer 1

recorded as an asset at cost

legal and registration fees incurred to obtain the intangible should also be capitalized

Question 2

internally developed intangibles

Answer 2

expensed against income when incurred

cannot capitalize r&d costs

examples: trademarks, goodwill from advertising, cost of developing, maintaining or restoring goodwill

exception to this rule and can be capitalized:

1) Legal fees associated with successful defense, if unsuccessful expense it and test for impairment
2) registration or consulting fees
3) design costs (of a trademark)
4) other direct costs to secure the asset

Question 3

R&D under IFRS and GAAP

Answer 3

IFRS: Research expensed, development capitalized

GAAP: R&D expensed