Intangible Assets

Question 1

An intangible asset is..

Answer 1

an identifiable non-monetary asset without physical substance

Question 2

Identifiability

Answer 2

• Separability; 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, assets, or liability
• Arises from contractual or other legal rights

Question 3

Intangible assets recognition criteria

Answer 3

• Identifiability
• Control
• Future economic benefits probable
• Reliable measurements of costs

Question 4

Development expenses capitalized as asset if;

Answer 4

a) technical feasibility
b) intention to complete the intangible asset and to use or sell it
c) ability to use or sell the intangible asset
d) demonstration of how the intangible asset will generate the economic benefits
e) availability of adequate technical, financial, and other resources to complete the development
f) ability to measure reliably the expenditure

Question 5

Subsequent measurment of IA

Answer 5

Cost model

Revaluation model => only if there is an active market

Question 6

Cost model: Amortization and impairment

Answer 6

• Finite useful life
  Residual value assumed to be zero unless:
  a) there is a commitment by a third party to purchase the asset at the end of its useful life; or
  b) there is an active market for the asset

Allocated on a systematic basis over its usefil life

Indefine useful life

Periodic review te determine whether the asset still has an indefinite useful life
Required to test for impairment by comparing its recoverable amount with its carrying amount:
a) annually, and
b) whenever there is an indication that the intangible asset may be impaired