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    Intangible Exercises

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    Murtaza Badri
    1. An intangible asset is an identifiable non-monetary asset without physical substance. 2. An intangible asset is identifiable if it is capable of being separated or divided from the entity and sold, or arises from contractual or other legal rights. 3. Internally generated goodwill is not recognized as an asset. 4. An intangible asset with an indefinite useful life shall not be amortized. 5. It is true that an entity shall choose either the cost model or the revaluation model as its accounting policy for intangible assets.

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    Intangible Exercises

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    Murtaza Badri
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    1. An intangible asset is an identifiable non-monetary asset without physical substance. 2. An intangible asset is identifiable if it is capable of being separated or divided from the entity and sold, or arises from contractual or other legal rights. 3. Internally generated goodwill is not recognized as an asset. 4. An intangible asset with an indefinite useful life shall not be amortized. 5. It is true that an entity shall choose either the cost model or the revaluation model as its accounting policy for intangible assets.

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    1. An intangible asset is an identifiable non-monetary asset without physical substance. 2. An intangible asset is identifiable if it is capable of being separated or divided from the entity and sold, or arises from contractual or other legal rights. 3. Internally generated goodwill is not recognized as an asset. 4. An intangible asset with an indefinite useful life shall not be amortized. 5. It is true that an entity shall choose either the cost model or the revaluation model as its accounting policy for intangible assets.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    35 views2 pages

    Intangible Exercises

    Uploaded by

    Murtaza Badri
    1. An intangible asset is an identifiable non-monetary asset without physical substance. 2. An intangible asset is identifiable if it is capable of being separated or divided from the entity and sold, or arises from contractual or other legal rights. 3. Internally generated goodwill is not recognized as an asset. 4. An intangible asset with an indefinite useful life shall not be amortized. 5. It is true that an entity shall choose either the cost model or the revaluation model as its accounting policy for intangible assets.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    1.

    An intangible asset (other than goodwill) is:


    a. An identifiable asset without physical substance.
    b. A non-monetary asset without physical substance.
    c. An identifiable non-monetary asset without physical substance.

    2. An intangible asset is identifiable when:


    a. it is separable (i.e. capable of being separated or divided from the entity and sold,
    transferred, licensed, rented or exchanged, either individually or together with a
    related contract, asset or liability).
    b. It 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.
    c. either (a) or (b) applies.
    d. none of the above.

    3. Internally generated goodwill:


    a. Is recognised as an asset.
    b. Is not recognised as an asset.
    c. Is recognised as an asset only if it respects some criterions defined into IAS 38.

    4. An intangible asset with an indefinite useful life shall be amortized.


    a. True
    b. False

    5. An entity shall choose either the cost model or the revaluation model as its accounting policy
    for intangible assets.
    a. True
    b. False

    Exercises

    Exercise 1 – R&D costs

    Well Company is active in the production and sale of mechanical components. Well Company
    has a division specialized in R&D: the team receives a remuneration for € 50,000 per month; in
    addition, fixed manufacturing costs € 1,000 per month are allocated on R&D division on the
    basis of cost accounting.
    You work in the general accounting team of Well Company and you were preparing the
    financial statements with the help of a colleague.
    Your colleague tells you that on the basis of its audit, after talking with the manager of the
    R&D costs incurred from 15 October onwards can be considered as development activities in
    accordance with IAS 38.

    Required:

    Prepare accounting entries necessary to prepare the budget.

    Exercise 2

    Acquirers USA’s purchase of Target Firm

    Acquirer USA ($ thousands)


    Assets Liabilities & Equity
    Cash 200 Current Liabilities 50
    AR 50 Long-Term Debt 250
    Inventory 100 Stockholders’ Equity 300
    PPE, net 250
    Total Assets 600 Total Liabilities & Equity 600

    Target firm ($ thousands)


    Fair
    As As Fair
    Assets value Liabilities & Equity
    reported reported values
    s
    Cash 15 15 Current Liabilities 35 35
    AR 25 20 Long-Term Debt 105 70
    Inventory 65 60 Stockholders’ Equity 75
    PPE, net 110 125 (6,000 shares
    outstanding)
    Total 215 220 Total Liabilities & 215 105
    Assets Equity

     The stock of Target Firm (balance sheet and fair values shown above) is currently trading at
    $20/share. Acquirers USA purchases 100 percent of Target for $30/share in cash, for a total
    cash payment of $180,000 (30*6,000).

    1. How much goodwill will Acquirers USA record on its books?

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