Unit 4: Intangible Assets Flashcards
IAS N (Intangible Assets) states that, “in determining whether an asset that incorporates both intangible and tangible elements should be treated under IAS 16 Property, Plant and Equipment or as an intangible asset under this Standard, an entity uses judgement to assess which element is more significant.”
Ergo: when the software is not an integral part of the related hardware, computer software is treated as an intangible asset.
IAS 38; True.
By definition, an asset is a resource that is:
a) controlled by an entity as a result of past events; and
b) from which future economic benefits are expected to flow to the entity.
_______ is the cost of an asset, or other amount substituted for cost, less its residual value.
Depreciable amount
________ is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved materials, devices, products, processes, systems or services before the start of commercial production or use.
Development
An intangible asset will be recognized iff:
(a) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and
(b) the cost of the asset can be measured reliably.
[elements of identifiability, control, and future economic benefits]
Legal enforceability of a right is not always a necessary condition for control since an entity may be able to control the future economic benefits in some other way.
True.
One method of keeping control (for IA) is keeping something secret through employee confidentiality.
True.
The definition of an intangible asset requires an intangible asset to be identifiable to distinguish it from _____.
goodwill.
When is an asset identifiable?
(a) is separable, ie is capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so; or
(b) arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
Goodwill does not generate cash flows independently from other assets or group of assets, and therefore, the RA of goodwill as an individual asset cannot be determined.
True.
[T/F] If another Standard prescribes the accounting for a specific type of intangible asset, an entity applies that Standard instead of this Standard. As such, this Standard does not apply to:
(a) intangible assets held by an entity for sale in the ordinary course of business,
(b) deferred tax assets, and
(c) goodwill acquired in a business combination.
True.
Rights held by a lessee under licensing agreements for items such as motion picture films, video recordings, plays, manuscripts, patents and copyrights are within the scope of this Standard (IAS 38 - Intangible Assets) and are excluded from the scope of IFRS 16.
True.
_____ is the present value of the cash flows an entity expects to arise from the continuing use of an asset and from its disposal at the end of its useful life or expects to incur when settling a liability.
Entity-specific value
How are intangible assets defined in IAS 38?
An intangible asset is an identifiable (separable and/or arises from contractual or other legal rights) non‑monetary asset without physical substance.
An asset is identifiable if it either…
(a) is separable, ie is capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so; or
(b) arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations.
