Intangible Assets

Question 1

Recognition Criteria of Intangible Assets
- probable and measurable (definition of assets)

Answer 1

XPN : through business combination

Question 2

Critical Attributes of Intangible Asset (ICE)

Answer 2

Identifiability - separable
Control - enforced by contract or law
Economic Benefits

Question 3

Internally Generated
- customer list
- mastheads
- publishing rights
- goodwill

What is the treatment?

Answer 3

expensed (XPN : business combination)

Question 4

Research (new knowledge) are always expensed. True or False?

Development (application of new knowledge) are generally expensed. True or False?

Answer 4

• True
• True

XPN where Development is Capitalized (all must be met)
- technical feasibility
- intention to complete
- ability to use or sell
- probable and measurable
- availability of resources

Question 5

If you cannot distinguish if the cost is research or development, what is the treatment?

Answer 5

research costs (because of conservatism)

Question 6

I acquired in-process R & D. What is the treatment?

Answer 6

intangible asset (even if the acquired is research)

Question 7

PPE, IA, Materials for R & D
- With alternative use = expensed upon consumption
- No alternative use = fully expensed

Answer 7

Yes

Question 8

Subsequent Costs that
- improves the asset are capitalized. True or False?
- legal fees to register title are capitalized. True or False?
- legal fees to defend title are capitalized. True or False?

Answer 8

True, True, False (expensed)

Question 9

Finite Life vs Indefinite Life
- Useful Life

Answer 9

Finite
- legal life vs useful life (shorter)

Indefinite
- X

Question 10

Finite Life vs Indefinite Life
- Amortization

Answer 10

Finite
- SL method only

Indefinite
- X

Question 11

Finite Life vs Indefinite Life
- when to impair?

Answer 11

Finite
- if there are impairment indicators

Indefinite
- if there are impairment indicators
- + annually

Question 12

Finite Life vs Indefinite Life
- how to compute value in use?

Answer 12

Finite
- PV of net CF

Indefinite
- net CF / discount %

Question 13

Patent has a legal life of 20 years (patwenty). Is it renewable?

Trademark has a legal life of 10 years (t = 10). Is it renewable?

Answer 13

No, Yes

Question 14

Copyright has a legal life of 50 years after death (starts from registration).

Answer 14

Yes

Question 15

Initial Franchise Fee are capitalized.

Continuing Franchise Fee are expensed.

Answer 15

think of PFRS 15

Question 16

Goodwill is not recognized.
- it will be recognized only if business combination

Answer 16

Yes

Question 17

What is the treatment if computer software
- is for resale
- integral part of PPE
- not an integral part

Answer 17

• inventory
• PPE
• intangible asset

Question 18

Amortization of Computer Software
- if FV is estimated reliably
- if FV is not estimated reliably

Answer 18

• Cost x Current Sales / Total Sales
• Straight Line Method

Question 19

For computer software
- Research costs are always expensed. True or False?
- Development costs are generally expensed. True or False?

Answer 19

First of all, remember this is different to R&D
- Research → always expensed
- Development → always capitalized
- Subsequent Costs → inventory (for R&D → OPEX)

Question 20

Website Development
- for internal use are capitalized. True or False?
- customer can place an order are capitalized. True or False?
- customer cannot place an order are capitalized. True or False?

Answer 20

True, True, False (expensed)