Module 10 Flashcards
When are maintenance costs capitalizable?
increases useful life, increases productive capacity, increases efficiency of the asset
long lived assets that are non-financial assets without physical substance
intangible assets
Are most internally intangibles (research and development costs) expensed or capitalized?
expensed
What are the reasons internally developed intangibles can be capitalized?
SW dev costs incurred after technological feasibility has been achieved
Expenditures on general use research facilities (depreciation is included in R&D)
Are purchased intangibles recognized as an asset?
yes
How much of an intangible is recognized if you purchases an intangible?
the amount paid for the intangible
How much of an intangible is capitalized if the intangible is part of a business combination?
the estimated fair value of the intangible asset
How is an intangible amoztized?
Straight-line over the expected life
What if an intangible asset has an indefinite life?
the acquisition cost is not amortized but the asset must be evaluated for impairment on an annual basis
a contract in which the owner of an asset (lessor) conveys to another party (lessee) the right to use the asset for a fixed period of time
Lease
Lessee mad an installment purchase in which it borrowed money from the lessor and then used that money to purchase the asset or right to use it
Economic substance of a lease
How do you account for finance lease?
amortized ratably over life (operating expense) + actual interest payments (finance expense)
What is the main difference when accounting for operating leases post ASU 2016-02
annual amortization of the asset equals the annual lease payment minus the interest on the liability, GAAP considers the entire expense to be operating
Does gaap allow companies to write up long lived assets?
no
What gets tested und asc 360?
long lived asset , amortized intangibles and leased assets (not covered = good will and intangibles with indefinite lives)
