Intangibles (F3:M7) Flashcards
how are purchased intangible assets accounted for?
recorded at cost along with legal and registration fees. Amortized over life
how are internally developed intangible assets accounted for?
generally cost is expensed as incurred (e.g., R&D)
the following can be capitalized however:
legal fees and other costs related to successful defense of asset
registration/consulting fees
design costs
other direct costs to secure asset
when intangible assets are acquired, how is cost determined for the assets?
either by FV of the consideration given or by FV of the property acquired, WHICHEVER IS MORE CLEARLY EVIDENT
a copyright/patent is amortized over the shorter of its ___ or ___.
estimated life; remaining legal life
are initial franchise fees expensed or capitalized?
capitalized and amortized over the expected life of the franchise
are start-up costs, including organizational costs expensed or amortized?
expensed as incurred
is depreciation on equipment used in R&D considered an R&D expense?
yes
*depreciated over useful life, not life of R&D project
what determines whether or not computer software development costs are expensed or capitalized?
technological feasibility (which is established upon completion of a detailed program design/working model)
prior to feasibility = expense
after feasibility up until product is released for sale = capitalize
annual amortization of capitalized software costs is GREATER!! of which two formulas? (software to be sold)
percentage of rev =
total capitalized amount x (current gross rev for period / total projected gross rev for product)
straight line =
total capitalized amount x (1 / est. economic life)
as it relates to computer software development, when does amortization expense start getting recorded?
when product is released for sale
