Submitted by: Submitted by Mrtea
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Category: Business and Industry
Date Submitted: 09/04/2015 03:59 AM
List two assets which would not meet the ‘identifiable’ aspect of the definition of an intangible asset. (2 Marks)
Customer loyalty and Relationship with suppliers
Intangible assets acquired via a separate acquisition are always recognised. Why?
The price an entity pays to acquire an intangible asset will reflect expectations about future economic benefits of the will flow to the company. This meets the probability test to identify the asset.
How is an intangible asset acquired as part of a business combination measured for initial recognition? Why? (2 Marks)
It is measured at fair value as part of the total cost of the business acquisition. This is because the fair value of the assets represents the probability that the future economic benefits in the asset will flow to the controlling entity.
List two ways that fair value could be determined for intangible assets acquired as part of a business combination. (2 Marks)
1.) Quoted market price in active market
2.) Recent similar transactions if no active market
3.) Valuation techniques such as net present value
In the research phase all expenditure on a project must be expensed. Why? (1Mark)
In the research phase of an internal project an entity cannot demonstrate that an intangible asset exists that will generate probable future economic benefits. It cannot be proved that the outflow builds an asset so you cannot capitalised the cost
Identify three ways in which an entity may obtain an intangible asset. (1 Mark)
1. Separate acquisition
2. Purchase of a business that holds an intangible
3. Internally generate the asset
Where an intangible asset has been separately acquired how is its cost measured? (1 Mark)
It is valued at the cost paid for it at the date it was purchased. Amortization and appreciation are then based of that fair value
In what circumstances could an in-process development project be recognised as an intangible asset? (2 Marks)
1.)...