Lecture 11 - Intangibles And Goodwill Flashcards
Recognize intangibles if
They provide future economic benefit
Can be measured
Initially recorded at cost
Purchased intangibles are measured at
Cost
Intangibles acquired in business combination are measured at
Fair value
Internally developed intangibles: IFRS vs ASPE
IFRS requires costs to be capitalized when criteria is met, otherwise expense
ASPE allows expensing everything
Research and development costs
Research costs are expensed when incurred
Development costs are expensed except in certain circumstances
2 ways to measure intangibles after acquisition
Cost model ASPE
Revaluation model
Limited life intangibles
Amortize over useful life
No residual value
Debit amortization expense
Credit accumulated amortization
Indefinite life intangibles
Not amortized
Tested for impairment every accounting period
Intangible impairment: limited life
ASPE says to test impairment when an event happens indicating impairment
IFRS test each reporting period
2 intangible impairment models
Cost recovery ASPE
Rational entity IFRS
Cost recovery impairment model
Impaired if carrying amount > undiscounted future net cash flows
Impairment loss can’t be recovered
Rational entity impairment model
Impairment amount = carrying amount - recoverable amount
Recoverable amount
Higher of PV of future cash flows and FV - cost to sell
