Week 7 - Intangibles & Goodwill

Question 1

Definition of intnagibles

Answer 1

Identifiable non-monetary asset without physical substance that’s controlled by the business + generates economic benefit due to past events.

Question 2

Name 2 examples of an intangible

Answer 2

• Goodwill
• Patent
• Trademark
• Licence
• Development cost

Question 3

How are intangibles recognised in financial statements

Answer 3

• Meet intangible definition
• Meet framework recognition criteria

Question 4

How to account for purchased intangibles?

Answer 4

Debit - Intangibles
Credit- Cash & Payables

Question 5

What should you do with purchased intangibles over their period of life?

Answer 5

Amortise (depreciate) them.

Question 6

How is R&D treated in the financial statements?

Answer 6

As an expense.

Due to the uncertainty of succesful research.

Question 7

Do you capitalise internally generated aside from R&D?

Answer 7

NOOOOOOOOOOOOOOOO

Question 8

Goodwill definition

Answer 8

Difference between business worth and net assets.

Question 9

Name a way goodwill is created.

Answer 9

Reputation ​
Staff knowledge and skills​
Future profit potential​
Location

Question 10

How to calculate goodwill?

Answer 10

Purchase Price Of Business - Net Assets = Goodwill