INTANGIBLE ASSETS

enumerations r in this link : https://docs.google.com/spreadsheets/d/1I6hBL8Tt0AoBnz8MdKsSDeOLJVuk-lH4rA5Cah64I-0/edit?gid=72918326#gid=72918326

intangible assets

identifiable non-monetary assets without physical substance

rights, privileges, and competitive advantages

accounting for plant assets

they are recorded at cost

what is the accounting for intangible assets similar to?

how are they recorded as?

• carrying value is eliminated

• gain or loss, if any, is recorded

what happens with the disposal of accounting for intangible assets

cost shouldnt be allocated

what happens if the life of an intangible asset is indefinite?

PAS 38

PFRS 3: Business Combination

requires recognition of intangible assets only if certain criteria are met

accounting for goodwill is covered by

its not identifiable

why is goodwill not considered as an intangible asset?

identifiability

future economic benefits

control

identifiable attributes of intangible assets

identifiable

control

future economic benefits

figure out whether its FIC

• arises from contractual or other legal rights, regardless of whether those rights are transferable or separable from the entity or from other rights and obligations

• entity has power to obtain future economic benefits

• pertain to revenues

• if it is probable that expected future economic benefits will flow into entity

• cot of asset can be measured reliably

when can an intangible asset be recognized?

ye

PAS 38’s additional recognition criteria for internally generated intangible assets?

purchase price

all other expenditures necessary

what does the cost of intangible asset include?

purchase price

not included

not included

directly attributable cost

dac

dac

ni

ni

label whether its directly attributable cost or part of the purchase price or if it is not included at all

• import duties and non-refundable purchase taxes

• cost of introducing new product or service

• admin and overhead cost

• professional fees

• costs of employee benefits

• cost of testing asset

• cost incurred while asset is capable of operating

• initial operating losses

FMV of consideration given or intangible asset received, whichever is more evident

what is the cost of the intangible asset when acquired for consideration other than cash?

incurred

costs incurred to create internally created intangibles are expensed as _

trademarks, tradenames, newspaper mastheads, internet domain names

what are some examples of marketing-related intangibilities

trade name or trademark

official name under which a company does business, also known as a “doing business as” name or assumed name

through registration with the IPO of the Philippines

every 10 years

how is a trade mark be protected?

when is it renewed

masthead

internet domain names

a list at the top of a page that includes the names of the editors, writers, and owners

lbels used to identify one or more internet protocol addresses

customer-related intangibles

customer lists, orders and production backlogs, contractual and non-contractual relationships

a customer list is a limited life IA which is amortized on a straight-line basis

is customer list limited life?

artistic related IA

copyrights

government

a lifetime and 50 years after the artist’s death

involve ownership rights to literary works, musical works, etc. The ownership rights are protected by _, granted by _ which lasts _

franchise and licensing agreements, construction permits, broadcast rights, and service or supply contracts

examples of contract-related intangibilities

examples of contract-related intangibilities

franchise and licensing agreements, construction permits, broadcast rights, and service or supply contracts

franchise

license, permits

a contractual arrangement where a franchisor grants a franchisee the right to sell certain products

another type of franches called as _ involving a governmental body and a business enterprise which permits enterprise to use public property

by being amortized as operating expenses

annual impairment check

incurred

the cost of a franchise with limited life measures cost by…

while unlimited life, it means

annual payments made under franchise agreement are expensed as _

technology related intangibles

patent technologies and trade secrets are

patent

exclusive right issued by IPO, lasts 20 years

shorter

the cost of the patent should be amortized over its legal life of 20 years or a useful life, whichever is _

50,000

suppose landers acquires a newly patented product from an inventor for 500k, hm is the annual amortization expense

software

collection of instructions that enable a user to perform tasks with computer hardware

system software and application software

capitalized

expensed, part of the cost of the asset

technological feasibility

2 types of softwares

a purchased comp soft ware should be expensed or capitalized?

an operating system for hardware should be capitalized or expensed?

an internally developed software is expensed until?

probable future benefits, intent and ability to use or sell software, resources to complete software, ability to measure cost

technological feasibility is characterized by

goodwill

acquired when a buyer acquires an existing business

excess of purchase consideration

false

true

goodwill isnt identified with the business as a whole

goodwill can be sold only when the whole business is sold

r&d

technological and commercial feasibility

costs spent on developing the products

costs are recorded as expenses until..

indefinite useful life

definite useful life

intangible assets are classified as (2)

amortization

systemic write-off of an intangible asset

straight-line

the amortization method is computed on what basis?

at carrying value

how are intangible assets presented?

business entity’s superior management, skilled employees, high-quality products, fair pricing policies, and harmonious relations with labor unions

where is the goodwill amounted to?

no bc it has indef life

is goodwill amortized

research

if the entity cannot distinguish the research phase of an internal project in order to create an intangible asset from the development phase, the entity must treat that expenditure as it were incurred in the ________ phase