F9: Intangibles

Question 1

Per GAAP, how is the organization costs are treated?

Answer 1

Expensed immediately

Question 2

Under IFRS, when an item is recognized as an intangible asset other than goodwill?

Answer 2

Identifiable and lacks physical substance

Question 3

Formula for goodwill

Answer 3

FV of Consideration Given - FV of Net Asset Rec’d

Question 4

What are the steps for testing goodwill impairment?

Answer 4

1. Compare CV & FV
2. If FV > CV, no imapriment exist

Question 5

When to expense, capitalize and inventorial in software?

Answer 5

• Expense as R&D → Prior to technological feasibility
• Capitalize → After feasibility but prior to production
• Inventorial → Expense incurred during production
• Expensed → During training on internal use

Question 6

What are the steps to amortize software cost?

Answer 6

1. Larger of S/L or relative sales value approach
2. NRV is compared with #1.

• If CV > NRV, the excess is written off as amortization expense
• If CV < NRV, use CV

Question 7

Formula for sales value approach

Answer 7

( Current Sales / Current Sales + Est Sales ) x CV

Question 8

Define identifiable intangibles

Answer 8

• Separable (can be sold, transferred, licensed, exchanged or disposed of) or
• Arises from contractual or legal rights