Intangible Assets Flashcards

1
Q

Intangible assets

A

identifiable, non-monetary asset without physical substance

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2
Q

identifiability

A

tests whether a company can divide an asset from other assets and deal with it as an individual asset (separability)

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3
Q

separability

A

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, asset or liability

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4
Q

non-monetary

A

an asset is monetary if it is money held or an asset to be received in fixed or determinable amounts of money

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5
Q

Criteria recognition on intangible assets

A
  • identifiability (meets definition of intangible asset)
  • control (power to obtain economic benefits asset and ability to deny access benefits to all other parties
  • future economic benefits probable
  • reliable measurement of costs
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6
Q

Difficult to recognize internally generated intangible assets

A
  • problem of establishing whether or not there is an identifiable asset which will generate future economic benefits (highly uncertain)
  • problem of determining the cost of the asset reliably
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7
Q

Research expenses recognition

A

always recognized as an expense

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8
Q

Development expenses recognition criteria

A
  • technical feasibility
  • intention to complete the intangible asset and to use or sell it
  • ability to use or sell it
  • demonstration of how the intangible asset will generate economic benefits
  • availability of adequate technical, financial, and other resources to complete the development
  • ability to measure reliably the expenditure
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9
Q

explicit recognition exclusions

A
  • internally generated goodwill
  • internally generated brands, mastheads, publishing titles, etc.
  • certain expenditures relating to start-up activities, training activities, advertising and promotional activities, or relation and reorganization of the entity
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10
Q

measurement at initial recognition

A

at cost (purchase price, directly attributable costs or preparing the asset for its intended use, costs of generating an intangible asset)

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11
Q

not directly attributable costs intangible assets

A

indirect costs and general overheads, such as selling or administrative costs, costs of staff training, initial losses

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12
Q

subsequent measurement intangible assets

A
  • cost model - measurement at cost less accumulated amortization and impairment losses
  • revaluation model - measurement at fair value determined at regular revaluation dates less any subsequent accumulated amortization and impairment losses (ONLY if active market exists)
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13
Q

residual value assumed to be zero unless

A
  • there is a commitment by a third party to purchase at end useful life
  • there is an active market for asset
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