Intangibles

Question 1

How to impair intangibles?

1. For definite life intangible
2. For indefinite intangibles
3. Goodwill

Answer 1

1. When BV> Recoverable cost

Impairment loss = BV- FV

2. Same as assets held for sale
   Impairment happen when BV > FV
   Impairment loss = BV-FV
3. Two steps
   When event trigger decrease in FV

Question 2

Increase of cash surrender value of life insurance would record as?

Answer 2

Decrease annual insurance expense

Question 3

For officer’s death insurance proceeds, when there are cash surrender value, what amount to record as revenue in income stmt?

Answer 3

Proceeds - cash surrender value

Question 4

How to deal with start up expense?

Answer 4

Expensed as incurred

Question 5

Want costs are include in patent defending capitalization?

Answer 5

Legal cost and successfully defend the benefit of the patent
Tax paid for the patent and registration cost

Question 6

How to treat costs for continuous spending from new business during developing stage?

Answer 6

Capitalized or Deferred because they are recoverable from future revenues

Question 7

Is all intangibles subject to impairment?

Answer 7

Correct

If the intangible has a indefinite life, but mgmt believe the asset has finite life, the assets is treated as definite life intangible

Indefinite life intangible is not amortized

Question 8

What does successful effort cost defined in natural resource accounting?

Answer 8

Defined as assets because it brings future economic benefit

Question 9

What does unit of production means vs normal depreciable assets?

Answer 9

Usage declines

Normal assets: usage decline as time passes

Question 10

Under natural resources successful effort method, what are included in inventory?

Answer 10

Purchase of mineral rights
Successful portion of the Exploration of minerals
Site development cost
And ** wages and other extraction cost occurred in current year are also included!

If under full cost method, exclude the wages and extraction cost