Question 1

Which of the following statements is NOT correct?

Accepted Answer

A)  intangible assets are to be derecognised when there are no expected future benefits from the asset; 
B)  amortisation of an intangible with a finite useful life does not cease when the asset becomes temporarily idle; 
C)  amortisation of an intangible with an indefinite life does not cease when the asset is retired from active use; 
D)  gains or losses on disposal are calculated as the difference between the proceeds on disposal and the carrying amount at point of sale, with amortisation calculated up to the point of sale. 
A)  intangible assets are to be derecognised when there are no expected future benefits from the asset; 
B)  amortisation of an intangible with a finite useful life does not cease when the asset becomes temporarily idle; 
C)  amortisation of an intangible with an indefinite life does not cease when the asset is retired from active use; 
D)  gains or losses on disposal are calculated as the difference between the proceeds on disposal and the carrying amount at point of sale, with amortisation calculated up to the point of sale. C

Question 2

Unless acquired under a business combination, intangible assets must be initially measured using which of the following measurement approaches?

Accepted Answer

A)  discounted cash flows; 
B)  fair value; 
C)  net present value; 
D)  cost. 
A)  discounted cash flows; 
B)  fair value; 
C)  net present value; 
D)  cost. D

Question 3

The cost of an intangible asset is comprised of the fair value of the consideration:

Accepted Answer

A)  less legal costs incurred in the purchase; 
B)  plus directly attributable costs; 
C)  plus indirect costs; 
D)  less directly attributable costs. 
A)  less legal costs incurred in the purchase; 
B)  plus directly attributable costs; 
C)  plus indirect costs; 
D)  less directly attributable costs. B

Question 4

When an intangible asset is acquired by an exchange of assets, which of the following measures will need to be considered in the determination of that cost?

Accepted Answer

A)  The fair value of the asset given up; 
B)  The initial cost of the asset given up; 
C)  The carrying amount of the asset received; 
D)  The replacement cost of the asset received. 
A)  The fair value of the asset given up; 
B)  The initial cost of the asset given up; 
C)  The carrying amount of the asset received; 
D)  The replacement cost of the asset received.

Question 5

Which of the following statements is correct?

Accepted Answer

A)  IAS 38 requires disclosures about an entity's intangible assets, with disclosures being made on an asset by asset basis; 
B)  Disclosures about the useful lives of intangibles are required with explanations being required where assets are assessed to have finite useful lives; 
C)  Where the cost model is used, specific disclosures are required including assumptions made on estimating fair values; 
D)  Separate disclosures are required for internally generated intangibles. 
A)  IAS 38 requires disclosures about an entity's intangible assets, with disclosures being made on an asset by asset basis; 
B)  Disclosures about the useful lives of intangibles are required with explanations being required where assets are assessed to have finite useful lives; 
C)  Where the cost model is used, specific disclosures are required including assumptions made on estimating fair values; 
D)  Separate disclosures are required for internally generated intangibles.

Question 6

The original and planned investigation undertaken with the prospect of gaining new knowledge is described as:

Accepted Answer

A)  exploration; 
B)  development; 
C)  investigation; 
D)  research. 
A)  exploration; 
B)  development; 
C)  investigation; 
D)  research.

Question 7

According to the definition provided in IAS 38 Intangibles, activities undertaken in the 'research' phase of the generation of an asset may include:

Accepted Answer

A)  the application of knowledge to a design for the production of new materials; 
B)  original and planned investigation with the prospect of gaining new scientific knowledge; 
C)  the use of research findings to create a substantially improved product; 
D)  using knowledge to materially improve a manufacturing device. 
A)  the application of knowledge to a design for the production of new materials; 
B)  original and planned investigation with the prospect of gaining new scientific knowledge; 
C)  the use of research findings to create a substantially improved product; 
D)  using knowledge to materially improve a manufacturing device.

Question 8

A key characteristic that separates assets such as property, plant and equipment from intangible assets is:

Accepted Answer

A)  separability; 
B)  length of useful life; 
C)  lack of physical substance; 
D)  reliability. 
A)  separability; 
B)  length of useful life; 
C)  lack of physical substance; 
D)  reliability.

Question 9

Which of the following statements is NOT correct?

Accepted Answer

A)  intangible assets are to be derecognised on disposal; 
B)  amortisation of an intangible with a finite useful life ceases when the asset becomes temporarily idle; 
C)  intangible assets are to be derecognised when there are no expected future benefits from the asset; 
D)  gains or losses on disposal are calculated as the difference between the proceeds on disposal and the carrying amount at point of sale, with amortisation calculated up to the point of sale. 
A)  intangible assets are to be derecognised on disposal; 
B)  amortisation of an intangible with a finite useful life ceases when the asset becomes temporarily idle; 
C)  intangible assets are to be derecognised when there are no expected future benefits from the asset; 
D)  gains or losses on disposal are calculated as the difference between the proceeds on disposal and the carrying amount at point of sale, with amortisation calculated up to the point of sale.

Question 10

The characteristic that distinguishes the goodwill from other intangible assets is:

Accepted Answer

A)  identifiability; 
B)  its nature as a monetary asset; 
C)  that is has a physical embodiment; 
D)  it can be separated from the entity and sold individually. 
A)  identifiability; 
B)  its nature as a monetary asset; 
C)  that is has a physical embodiment; 
D)  it can be separated from the entity and sold individually.

Question 11

IAS 38 Intangibles, requires that an intangible asset with a finite life:

Accepted Answer

A)  be amortised across its useful life; 
B)  be amortised across a period of no greater than 20 years; 
C)  not be amortised in periods when it is been properly maintained; 
D)  not be subject to amortisation charges. 
A)  be amortised across its useful life; 
B)  be amortised across a period of no greater than 20 years; 
C)  not be amortised in periods when it is been properly maintained; 
D)  not be subject to amortisation charges.

Question 12

The recognition criteria that an asset must meet before it may be recognised and presented in the financial statements include:

Accepted Answer

A)  that the recognition of the asset is relevant to user decision making; 
B)  probability that future economic benefits will flow to the entity; 
C)  that the information about the asset is neutral; 
D)  a likelihood that the cost of the asset is verifiable. 
A)  that the recognition of the asset is relevant to user decision making; 
B)  probability that future economic benefits will flow to the entity; 
C)  that the information about the asset is neutral; 
D)  a likelihood that the cost of the asset is verifiable.

Question 13

Which of the following assets is regarded as meeting the identifiability criteria for recognition as an identifiable intangible asset that can be recorded as acquired in a business combination?

Accepted Answer

A)  customer base; 
B)  royalty agreements; 
C)  ongoing recruitment programs; 
D)  strong and favourable employee relations. 
A)  customer base; 
B)  royalty agreements; 
C)  ongoing recruitment programs; 
D)  strong and favourable employee relations.

Question 14

For an asset to be classified as an identifiable intangible, IAS 38 Intangibles requires that it meet which of the following criteria?
 I) It arises from a contractual or legal right.
II) Its fair value must be able to be reliably measured.
III) It is separable from the entity.
IV) Its cost must reliably measurable.

Accepted Answer

A)  I or IV only; 
B)  I or II only; 
C)  II or III only; 
D)  I or III only. 
A)  I or IV only; 
B)  I or II only; 
C)  II or III only; 
D)  I or III only.

Question 15

Which of the following assets is regarded as meeting the identifiability criteria for recognition as an identifiable intangible asset that may be acquired in a business combination?

Accepted Answer

A)  customer service capability; 
B)  newspaper mastheads; 
C)  favourable government relations; 
D)  presence in geographic locations. 
A)  customer service capability; 
B)  newspaper mastheads; 
C)  favourable government relations; 
D)  presence in geographic locations.

Question 16

Parsons Limited was involved in a highly successful plastics manufacturing business. It commenced a project to design a more efficient extrusion system for its plastic pipes. The following outlays occurred: 
$\bullet$January: Research salaries £50 000
$\bullet$February: Research materials £30 000
$\bullet$March: Re-development of the extrusion plant £400 000
$\bullet$April: Final adjustments to the extrusion plant £25 000.
The amount to be expensed by this company at the end of the financial year, 30 June, is:

Accepted Answer

A)  £30 000; 
B)  £50 000; 
C)  £80 000; 
D)  £480 000. 
A)  £30 000; 
B)  £50 000; 
C)  £80 000; 
D)  £480 000.

Question 17

Under IAS 38 Intangibles, an intangible asset with an indefinite useful life is:

Accepted Answer

A)  not able to be recognised by an entity as an asset; 
B)  not subject to annual amortisation charges; 
C)  amortised using the straight-line method over a period of no more than 20 years; 
D)  amortised using the reducing balance method over a period not exceeding 5 years. 
A)  not able to be recognised by an entity as an asset; 
B)  not subject to annual amortisation charges; 
C)  amortised using the straight-line method over a period of no more than 20 years; 
D)  amortised using the reducing balance method over a period not exceeding 5 years.

Question 18

Under the revaluation method of measuring an intangible, the asset is carried at fair value and subject to charges for:

Accepted Answer

A)  amortisation and impairment; 
B)  inflation in value; 
C)  interest expense; 
D)  increment in value. 
A)  amortisation and impairment; 
B)  inflation in value; 
C)  interest expense; 
D)  increment in value.

Question 19

Items such as market knowledge, effective advertising programs, fundraising capabilities and trained staff are NOT regarded as assets because they:

Accepted Answer

A)  are monetary items; 
B)  cannot be measured; 
C)  are not controlled by the entity; 
D)  are too difficult to manage. 
A)  are monetary items; 
B)  cannot be measured; 
C)  are not controlled by the entity; 
D)  are too difficult to manage.

Question 20

Under IAS 38 Intangibles, goodwill may only be recognised as an asset if it:

Accepted Answer

A)  arises as a result of creating new assets within the normal business operations; 
B)  does not exceed its internally recorded cost; 
C)  is internally generated; 
D)  is acquired as part of a business combination. 
A)  arises as a result of creating new assets within the normal business operations; 
B)  does not exceed its internally recorded cost; 
C)  is internally generated; 
D)  is acquired as part of a business combination.

Exam 24: Financial Instruments

Which of the following statements is NOT correct?

Unless acquired under a business combination, intangible assets must be initially measured using which of the following measurement approaches?

The cost of an intangible asset is comprised of the fair value of the consideration:

When an intangible asset is acquired by an exchange of assets, which of the following measures will need to be considered in the determination of that cost?

Which of the following statements is correct?

The original and planned investigation undertaken with the prospect of gaining new knowledge is described as:

According to the definition provided in IAS 38 Intangibles, activities undertaken in the 'research' phase of the generation of an asset may include:

A key characteristic that separates assets such as property, plant and equipment from intangible assets is:

Which of the following statements is NOT correct?

The characteristic that distinguishes the goodwill from other intangible assets is:

IAS 38 Intangibles, requires that an intangible asset with a finite life:

The recognition criteria that an asset must meet before it may be recognised and presented in the financial statements include:

Which of the following assets is regarded as meeting the identifiability criteria for recognition as an identifiable intangible asset that can be recorded as acquired in a business combination?

Which of the following assets is regarded as meeting the identifiability criteria for recognition as an identifiable intangible asset that may be acquired in a business combination?

Under IAS 38 Intangibles, an intangible asset with an indefinite useful life is:

Under the revaluation method of measuring an intangible, the asset is carried at fair value and subject to charges for:

Items such as market knowledge, effective advertising programs, fundraising capabilities and trained staff are NOT regarded as assets because they:

Under IAS 38 Intangibles, goodwill may only be recognised as an asset if it:

The Iasb and Its Conceptual Framework

Owners Equity: Share Capital and Reserves

Fair Value Measurement

Revenue From Contracts With Customers

Provisions, Contingent Liabilities and Contingent Assets

Financial Instruments

Share-Based Payment

Inventories

Employee Benefits

Leases

Impairment of Assets

Financial Statement Presentation

Statement of Cash Flows

Operating Segments

Other Key Notes Disclosures

Consolidation: Controlled Entities

Consolidation: Wholly Owned Subsidiaries

Consolidation: Intragroup Transactions

Translation of the Financial Statements of Foreign Entities

Agriculture

Associates and Joint Ventures

Joint Arrangements

Revenue From Contracts With Customers

Financial Instruments

Share-Based Payment

Exploration for and Evaluation of Mineral Resources

Filters