Brighton Shores Plc has a cash generating unit (CGU)and has been assessed for impairment and it has determined an impairment loss of £100 000. The following information relates to the assets as at 30 June 2012. \[\begin{array} { | l | r | r | } \hline & \text { Carrying amount } & \text { Recoverable amount } \\ \hline \text { Buildings } & 800000 & 900000 \\ \hline \text { Equipment } & 200000 & 150000 \\ \hline \text { Goodwill } & 50000 & \\ \hline \end{array}\] In accordance with IAS 36 Impairment of Assets what should be the carrying amount of equipment as at 30 June 2014?

A) £0 B) £100 000 C) £150 000 D) £190 000 A) £0 B) £100 000 C) £150 000 D) £190 000 C

Broadbeach Plc is a manufacturing company with three subsidiaries.The following information relates to the goodwill account of Broadbeach Plc for the year ended 30 June 2013. \[\begin{array} { | l | r | r | r | r | } \hline & \text { Goodwill } & \begin{array} { c } \text { Accumulated } \\ \text { impairment loss } \end{array} & \begin{array} { c } \text { Carrying amount } \\ \text { of CGU } \end{array} & \begin{array} { c } \text { Recoverable amount } \\ \text { of CGU } \end{array} \\ \hline \text { Mantra Ltd } & 50000 & 10000 & 250000 & 270000 \\ \hline \text { Oceania Ltd } & 40000 & \text { Nil } & 310000 & 250000 \\ \hline \text { Wave Ltd } & 60000 & \text { Nil } & 450000 & 600000 \\ \hline \end{array}\] In accordance with IAS 36,what is the net effect of above goodwill accounts on the statement of comprehensive income and statement of financial position of Broadbeach Plc?

A) \[\begin{array} { | l | l | } \hline \begin{array} { l } \text { Statement of comprehensive } \\ \text { income } \end{array} & \begin{array} { l } \text { Statement of financial } \\ \text { position } \end{array} \\ \hline \text { Increase } & \text { Increase } \\ \hline \end{array}\] B) \[\begin{array} { | l | l | } \hline\begin{array} { l } \text { Statement of comprehensive } \\ \text { income } \end{array} & \begin{array} { l } \text { Statement of financial } \\ \text { position } \end{array} \\ \hline \text { Decrease } & \text { Decrease } \\ \hline \end{array}\] C) \[\begin{array} { | l | l | } \hline\begin{array} { l } \text { Statement of comprehensive } \\ \text { income } \end{array} & \begin{array} { l } \text { Statement of financial } \\ \text { position } \end{array} \\ \hline \text { Increase } & \text { Decrease } \\ \hline \end{array}\] D) \[\begin{array} { | l | l | } \hline \begin{array} { l } \text { Statement of comprehensive } \\ \text { income } \end{array} & \begin{array} { l } \text { Statement of financial } \\ \text { position } \end{array} \\ \hline \text { Decrease } & \text { Increase } \\ \hline \end{array}\] A) \[\begin{array} { | l | l | } \hline \begin{array} { l } \text { Statement of comprehensive } \\ \text { income } \end{array} & \begin{array} { l } \text { Statement of financial } \\ \text { position } \end{array} \\ \hline \text { Increase } & \text { Increase } \\ \hline \end{array}\] B) \[\begin{array} { | l | l | } \hline\begin{array} { l } \text { Statement of comprehensive } \\ \text { income } \end{array} & \begin{array} { l } \text { Statement of financial } \\ \text { position } \end{array} \\ \hline \text { Decrease } & \text { Decrease } \\ \hline \end{array}\] C) \[\begin{array} { | l | l | } \hline\begin{array} { l } \text { Statement of comprehensive } \\ \text { income } \end{array} & \begin{array} { l } \text { Statement of financial } \\ \text { position } \end{array} \\ \hline \text { Increase } & \text { Decrease } \\ \hline \end{array}\] D) \[\begin{array} { | l | l | } \hline \begin{array} { l } \text { Statement of comprehensive } \\ \text { income } \end{array} & \begin{array} { l } \text { Statement of financial } \\ \text { position } \end{array} \\ \hline \text { Decrease } & \text { Increase } \\ \hline \end{array}\]

Broadbeach Plc is a manufacturing company with three subsidiaries.The following information relates to the goodwill account of Broadbeach Plc for the year ended 30 June 2013: \[\begin{array} { | l | r | r | r | r | } \hline\text { (in dollars) } & \text { Goodwill } & \begin{array} { c } \text { Accumulated } \\ \text { impairment loss } \end{array} & \begin{array} { c } \text { Carrying amount } \\ \text { of CGU } \end{array} & \begin{array} { c } \text { Recoverable amount } \\ \text { of CGU } \end{array} \\ \hline \text { Mantra Ltd } & 50000 & 10000 & 250000 & 270000 \\ \hline \text { Oceania Ltd } & 40000 & \text { Nil } & 310000 & 250000 \\ \hline \text { Wave Ltd } & 60000 & \text { Nil } & 450000 & 600000 \\ \hline \end{array}\] What is the carrying amount of goodwill as at 30 June 2013 consistent with IAS 36 Impairment of Assets?

A) Zero B) £100 000 C) £140 000 D) £150 000 A) Zero B) £100 000 C) £140 000 D) £150 000

Exam 8: Accounting for Intangibles

Brighton Shores Plc has a cash generating unit (CGU)and has been assessed for impairment and it has determined an impairment loss of £100 000. The following information relates to the assets as at 30 June 2012. Carrying amount Recoverable amount Buildings 800000 900000 Equipment 200000 150000 Goodwill 50000 In accordance with IAS 36 Impairment of Assets what should be the carrying amount of equipment as at 30 June 2014?

Free

(Multiple Choice)

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Question 1

Correct Answer:

Verified

If the fair value of a revalued intangible asset can no longer be determined by reference to an active market,IAS 36 requires the use of the cost model.

Free

(True/False)

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Question 2

Correct Answer:

Verified

False

In order to determine whether or not expenditure should be treated as an intangible asset,the relevant test to apply is:

Free

(Multiple Choice)

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Question 3

Correct Answer:

Verified

Prior to the introduction of impairment testing companies had attempted to manipulate their financial statements through amortisation:

(Multiple Choice)

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Question 4

Which of the following statements is correct with respect to intangible assets?

(Multiple Choice)

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Question 5

Outline the requirements of IAS 38 on recognition and measurement of research and development activities.

(Essay)

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Question 6

Because intangible assets have no physical form:

(Multiple Choice)

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Question 7

The revaluation model requires all intangible assets in the same class to have a fair value determined by reference to an active market.

(True/False)

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Question 8

After initial recognition,the acquirer shall recognise goodwill at:

(Multiple Choice)

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Question 9

The release of IAS 38 has had what impact on the methods of amortising goodwill?

(Multiple Choice)

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Question 10

Castle Co Ltd is working on three research projects.Project Jonah is government-sponsored research on synthesising currently available research results on the possible triggers of asthma attacks.Project Beta involves researching the genetic tags associated with heart disease based on the genome project.A test to identify the predisposition to heart disease in children has been developed and will be on the market in 2013.Since 2011 research and development expenditures on this project are applied development costs only.Project Sigma is cutting edge research being conducted to try and discover a means of 'disassembling' molecules and then 'reassembling' them in their original form.The company hopes that this work will lay the basis for future dreams of teleportation as a method of transport.Details of expenditures and recoverable amounts expected beyond a reasonable doubt at this time are: What is the total research and development deferral for each project as at the end of the year 2012?

(Multiple Choice)

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Question 11

Broadbeach Plc is a manufacturing company with three subsidiaries.The following information relates to the goodwill account of Broadbeach Plc for the year ended 30 June 2013. Goodwill Accumulated impairment loss Carrying amount of CGU Recoverable amount of CGU Mantra Ltd 50000 10000 250000 270000 Oceania Ltd 40000 Nil 310000 250000 Wave Ltd 60000 Nil 450000 600000 In accordance with IAS 36,what is the net effect of above goodwill accounts on the statement of comprehensive income and statement of financial position of Broadbeach Plc?

(Multiple Choice)

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Question 12

Which of the following statement(s)in regard to goodwill is/are correct in accordance with IAS 36 Impairment of Assets?

(Multiple Choice)

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Question 13

IAS 38 prohibits the recognition of intangible assets using the revaluation model.

(True/False)

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Question 14

Broadbeach Plc is a manufacturing company with three subsidiaries.The following information relates to the goodwill account of Broadbeach Plc for the year ended 30 June 2013: (in dollars) Goodwill Accumulated impairment loss Carrying amount of CGU Recoverable amount of CGU Mantra Ltd 50000 10000 250000 270000 Oceania Ltd 40000 Nil 310000 250000 Wave Ltd 60000 Nil 450000 600000 What is the carrying amount of goodwill as at 30 June 2013 consistent with IAS 36 Impairment of Assets?

(Multiple Choice)

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Question 15

During 2001 the Financial Accounting Standards Board in the United States indicated they would look to change a requirement for the treatment of goodwill.That change is:

(Multiple Choice)

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Question 16

As part of adopting IFRS,goodwill acquired in a business combination is no longer amortised.Instead,the acquirer shall test goodwill for impairment (IFRS 3 Business Combinations).When is goodwill considered to be impaired?

(Multiple Choice)

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Question 17

There is a concern that research and development may be reduced as a result of the new requirements in IAS 38 because:

(Multiple Choice)

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Question 18

Examples of elements of a business that commonly make up goodwill are:

(Multiple Choice)

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Question 19

Big Ltd has purchased 100% of Little Ltd for a cash payment of $800 000.The additional costs to Big Ltd to complete the purchase were $3000.An extract from the statement of financial position for Little Ltd at the date of acquisition shows: Additional information: The assets and liabilities of Little Ltd are stated at fair value except that: Land and buildings have a fair value of $300 000 Accounts receivable have a fair value of $20 000. Little owns a licence that has not been recorded in the financial statements.Its fair value is $150 000. What is the amount of purchased goodwill that has been acquired by Big Ltd?

(Multiple Choice)

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Question 20

Showing 1 - 20 of 55

If the fair value of a revalued intangible asset can no longer be determined by reference to an active market,IAS 36 requires the use of the cost model.

In order to determine whether or not expenditure should be treated as an intangible asset,the relevant test to apply is:

Prior to the introduction of impairment testing companies had attempted to manipulate their financial statements through amortisation:

Which of the following statements is correct with respect to intangible assets?

Outline the requirements of IAS 38 on recognition and measurement of research and development activities.

Because intangible assets have no physical form:

The revaluation model requires all intangible assets in the same class to have a fair value determined by reference to an active market.

After initial recognition,the acquirer shall recognise goodwill at:

The release of IAS 38 has had what impact on the methods of amortising goodwill?

Which of the following statement(s)in regard to goodwill is/are correct in accordance with IAS 36 Impairment of Assets?

IAS 38 prohibits the recognition of intangible assets using the revaluation model.

During 2001 the Financial Accounting Standards Board in the United States indicated they would look to change a requirement for the treatment of goodwill.That change is:

As part of adopting IFRS,goodwill acquired in a business combination is no longer amortised.Instead,the acquirer shall test goodwill for impairment (IFRS 3 Business Combinations).When is goodwill considered to be impaired?

There is a concern that research and development may be reduced as a result of the new requirements in IAS 38 because:

Examples of elements of a business that commonly make up goodwill are:

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Related-Party Disclosures

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

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