Exam 8: Accounting for Intangibles

Glass 4 Windows is involved in a research and development project to create a filtering window that removes the need for curtains.For the current year ended 30 June 2011 expenditure on the project is as follows: Research \ 235000 Development costs \ 350000 The window is expected to earn revenues of $70 000 per year for the 10 years commencing 1 July 2011.Assuming straight-line amortisation,how much of the research and development cost should be expensed this period and what amount should be amortised in the year ended 30 June 2014?

AASB 138 requires that all intangibles,whether purchased or internally generated,be capitalised.

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

AASB 138 defines development as:

Discuss the concerns held by Australia corporate executives on the amortisation of intangibles prior to Australia's 2005 adoption of IFRS.

Broadbeach Ltd is a manufacturing company with three subsidiaries.The following information relates to the goodwill account of Broadbeach Ltd for the year ended 30 June 2009: (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 2009 consistent with AASB 136 Impairment of Assets?

Which of the following is not a directly attributable cost of research and development?

Explain the difference between an 'infinite life' and an 'indefinite life'.

AASB 138 states that intangible assets:

Discuss the considerations outlined in AASB 138 on revaluation of intangible assets.What are the implications of this standard on the relevance of financial information?

After initial recognition,the acquirer shall recognise goodwill at:

AASB 138 prohibits the recognition of intangible assets using the revaluation model.

Purchased goodwill is recognised as the amount of:

Which of the following expenses are likely to satisfy the definition of an asset,and hence may be capitalised as an intangible asset?

Discuss the benefits of subjecting goodwill to impairment testing as opposed to amortisation.In your answer,consider the relevance and faithfully represented qualitative characteristics of financial information.

Intangible assets that are amortised are no longer subjected to impairment testing.

Where a revaluation occurs,it is to be to the fair value of the asset.

AASB 138 contains some elements that seem to be reactions to opportunistic behaviour by preparers of accounts and to the degree of uncertainty surrounding goodwill as an unidentifiable intangible asset.These elements include:

Which of the following statement(s)in regard to goodwill is/are correct in accordance with AASB 136 Impairment of Assets?

Internally generated brands,mastheads,publishing titles and customer lists are permitted to be recognised as intangible assets.