Editorial Note Related commentary and examples in Navigate IFRS Accounting Issue date IAS 38 Intangible Assets (2004) was originally issued in March 2004, effective from 31 March 2004. All effective
amendments issued since that date are reflected in the text of the standard. Detailed editorial notes set out the history of major amendments, and prospective amendments not yet effective. Key amendments The standard incorporates the following amendments that are already effective: To subscribe to this content, simply call 0800 231 5199 We can create a package
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The following is a list of items that could be included in the intangible assets section of the balance sheet. 1. Investment in a subsidiary company. 2. Timberland. 3. Cost of engineering activity required to advance the design of a product to the manufacturing stage. 4. Lease prepayment (6 months’ rent paid in advance). 5. Cost of equipment obtained. 6. Cost of searching for applications of new research findings. 7. Costs incurred in the formation of a corporation. (adsbygoogle = window.adsbygoogle || []).push({}); 8. Operating losses incurred in the start-up of a business. 9. Training costs incurred in start-up of new operation. 10. Purchase cost of a franchise. 11. Goodwill generated internally. 12. Cost of testing in search for product alternatives. 13. Goodwill acquired in the purchase of a business. 14. Cost of developing a patent. 15. Cost of purchasing a patent from an inventor. 16. Legal costs incurred in securing a patent. 17. Unrecovered costs of a successful legal suit to protect the patent. (adsbygoogle = window.adsbygoogle || []).push({}); 18. Cost of conceptual formulation of possible product alternatives. 19. Cost of purchasing a copyright. 20. Research and development costs. 21. Long-term receivables. 22. Cost of developing a trademark.23. Cost of purchasing a trademark. Instructions: (a) Indicate which items on the list above would generally be reported as intangible assets in the balance sheet. (b) Indicate how, if at all, the items not reportable as intangible assets would be reported in the financial statements.
Answer An identified non-monetary item with no physical substance is known as an intangible asset. When an asset is separable or comes from contractual or other legal rights, it is identifiable. 77. Operating losses incurred during the start-up years of a new business should be a. accounted for and reported like the operating losses of any other business. b. written off directly against retained earnings. c. capitalized as a deferred charge and amortized over five years. d. capitalized as an intangible asset and amortized over a period not to exceed 20 years. 78. Start-up costs include organizational costs, such as legal and state fees incurred to organize a new business entity. These costs should be 79. Which of the following would not be considered an R & D activity? 80. Which of the following intangible assets should be shown as a separate item on the statement of financial position? 81. Which of the following should not be reported under the “Other income and expense” section of the income statement? a. Goodwill impairment losses. b. Trade name amortization expense. c. Recovery of impairment losses d. All of these choices are correct. 82. The total amount of patent cost amortized to date is usually 83. Intangible assets are reported on the statement of financial position Multiple Choice Answers — Conceptual Item 31. b 39. b 47. d 55. b 63. a 71. d 79. a 32. c 40. b 48. c 56. d 64. c 72. d 80. a 33. a 41. d 49. d 57. c 65. a 73. b 81. b 34. c 42. d 50. b 58. b 66. d 74. d 82. c 35. a 43. b 51. c 59. d 67. d 75. c 83. c 36. d 44. c 52. a 60. a 68. d 76. b 37. d 45. a 53. c 61. b 69. b 77. a 38. d 46. b 54. c 62. d 70. d 78. d MULTIPLE CHOICE — Computational Newly uploaded documentsWhich of the following costs should be capitalized?What Costs Can Be Capitalized? Capitalized costs can include intangible asset expenses can be capitalized, like patents, software creation, and trademarks. In addition, capitalized costs include transportation, labor, sales taxes, and materials.
Which of the following costs should not be capitalized?Expenses that must be taken in the current period (they cannot be capitalized) include Items like utilities, insurance, office supplies, and any item under a certain capitalization threshold. These are considered expenses because they are directly related to a particular accounting period.
Which of the following costs are generally expensed as incurred?Research costs are expensed as they are incurred.
Which of the following research and development costs should be capitalized and allocated over current and future projects?The answer is a. Research and development general laboratory building which can be put to alternative uses in the future. The research and development general laboratory building should be recorded as an asset since it will benefit the company beyond research and development and will need depreciation over its life.
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Operating losses incurred during the start-up years of a new business should be
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