Question 1

What two models are permitted by AASB for measuring intangible assets subsequent to initial recognition.

Accepted Answer

A)   Basis and fair value
B)   Cost and revaluation
C)   Cost and fair value
D)   Revaluation and expected use

Question 2

Which of these provisions of AASB 138 is inconsistent with the asset recognition criteria of the Framework?

Accepted Answer

A)   Reviewing the unamortised balance of goodwill annually and, to the extent it is no longer supported by probable future economic benefits, writing it down
B)   Recognising purchased goodwill as an asset
C)   Not recognising internally generated goodwill as an asset when the market value of an entity can be measured reliably
D)   Amortising goodwill

Question 3

Prior to the first Australian accounting standard on research and development,costs associated with research and development were usually:

Accepted Answer

A)   capitalised
B)   expensed and reinstated
C)   expensed in the period incurred
D)   none of the above

Question 4

In AASB 138,an 'identifiable non-monetary asset without physical substance',is the definition of:

Accepted Answer

A)   an intangible asset
B)   cash at bank
C)   goodwill
D)   none of the above

Question 5

The initial patent period granted by the Australian Government and the potential legal life of trademarks and brand names,are respectively:

Accepted Answer

A)   10 years; unlimited, provided they continue to be registered
B)   16 years; unlimited, provided they continue to be registered
C)   20 years; 16 years
D)   7 years; 7 years

Question 6

AASB 138 requires disclosure of:

Accepted Answer

A)   the aggregate amount of research and development costs recognised as an expense during the period
B)   the amortisation methods used for intangible assets with finite lives
C)   a reconciliation of the opening and closing asset balances showing additions, revaluations, impairment losses and amortisation
D)   all of the above

Question 7

AASB 138 prohibits recognising as intangible assets all internally generated:

Accepted Answer

A)   costs of patents
B)   brand names costs
C)   trademark costs
D)   all of the above

Question 8

When the sum of the fair values of the identifiable net assets acquired exceeds the cost of acquisition,the difference is known as:

Accepted Answer

A)   negative goodwill
B)   excess on acquisition
C)   goodwill
D)   both A and B

Question 9

Discuss the arguments for and against each of the following:
i.Writing off goodwill immediately as an expense in the income statement
 compared to recognising it as an asset in the balancesheet.
ii. Systematically amortising goodwill that has been recognisedas an asset compared to not amortising it.

Accepted Answer

Most textbooks that include a section on...

Question 10

Which of the following is a necessary factor relating to the existence of an intangible asset?

Accepted Answer

A)   Disclosure in financial statements
B)   Classification
C)   Liquidity
D)   Existence of future economic benefits D

Question 11

When is goodwill recognised?

Accepted Answer

A)   When an asset is sold above its book value
B)   As part of an arms'-length purchase of one entity by another
C)   By the company that is being purchased in an arms'-length purchase
D)   When the market price of a company's stock rises B

Question 12

Compare the costs likely to be recorded for internally developed patents with those associated with a patent purchased in an arm's length transaction.

Accepted Answer

Research and development may result in t...

Question 13

The initial recognition of the costs associated with intangible assets as an asset rather than an expense:

Accepted Answer

A)   is consistent with the treatment of these costs for income tax purposes
B)   is allowable provided that a future economic benefit exists
C)   is allowable provided that the cost is material
D)   all of the above

Question 14

Which of the following is recommended as the preferred accounting treatment for excess on acquisition?

Accepted Answer

A)   Reduce proportionately the fair values of the non-monetary assets acquired until the excess is eliminated
B)   Reduce proportionately the fair values of the monetary assets acquired until the excess is eliminated
C)   Treat it as a deferred credit in the balance sheet and periodically allocate it as income
D)   Immediately recognise the excess on acquisition as income in the income statement

Question 15

Purchased computer software should be:

Accepted Answer

A)   recognised as an asset and recorded at cost
B)   amortised over its useful life
C)   subject to an impairment test
D)   all of the above

Question 16

What criteria must be demonstrated by an entity for the recognition of an item as an intangible asset?

Accepted Answer

A)   The item must meet the definition of an intangible asset
B)   The recognition criteria
C)   Both A and B
D)   Neither A nor B

Question 17

When the value of an intangible asset is impaired,the change in the value of the asset is:

Accepted Answer

A)   recognised as a charge in the statement of comprehensive income
B)   recognised as a charge to equity
C)   amortised over a period not exceeding 20 years
D)   all of the above

Question 18

AASB 138 requires that entities classify their intangible assets into those with finite lives and those with indefinite lives.Which of these is a factor that tends to limit the useful life of intangible assets?

Accepted Answer

A)   Technological obsolescence
B)   Contractual and legal rights
C)   Uncertainty
D)   All are factors D

Question 19

Which accounting standard distinguishes between intangible assets and goodwill?

Accepted Answer

A)   AASB 136
B)   AASB 3
C)   AASB 138
D)   AASB 9

Question 20

The main reason why accounting for intangible assets is more difficult than accounting for other assets is:

Accepted Answer

A)   intangible assets are inherently inert and their value can grow or dissipate quickly
B)   intangible assets may be developed internally
C)   intangible assets do not have physical substance
D)   all of the above are equally important reasons why accounting for intangible assets is more difficult than accounting for other assets

Exam 10: Accounting for Intangible Assets

What two models are permitted by AASB for measuring intangible assets subsequent to initial recognition.

Correct AnswerverifiedShow Answer

Which of these provisions of AASB 138 is inconsistent with the asset recognition criteria of the Framework?

Correct AnswerverifiedShow Answer

Prior to the first Australian accounting standard on research and development,costs associated with research and development were usually:

Correct AnswerverifiedShow Answer

In AASB 138,an 'identifiable non-monetary asset without physical substance',is the definition of:

Correct AnswerverifiedShow Answer

The initial patent period granted by the Australian Government and the potential legal life of trademarks and brand names,are respectively:

Correct AnswerverifiedShow Answer

AASB 138 requires disclosure of:

Correct AnswerverifiedShow Answer

AASB 138 prohibits recognising as intangible assets all internally generated:

Correct AnswerverifiedShow Answer

When the sum of the fair values of the identifiable net assets acquired exceeds the cost of acquisition,the difference is known as:

Correct AnswerverifiedShow Answer

Discuss the arguments for and against each of the following: i.Writing off goodwill immediately as an expense in the income statement compared to recognising it as an asset in the balancesheet. ii. Systematically amortising goodwill that has been recognisedas an asset compared to not amortising it.

Correct AnswerverifiedMost textbooks that include a section on...View AnswerShow Answer

Which of the following is a necessary factor relating to the existence of an intangible asset?

Correct AnswerverifiedD

When is goodwill recognised?

Correct AnswerverifiedB

Compare the costs likely to be recorded for internally developed patents with those associated with a patent purchased in an arm's length transaction.

Correct AnswerverifiedResearch and development may result in t...View AnswerShow Answer

The initial recognition of the costs associated with intangible assets as an asset rather than an expense:

Correct AnswerverifiedShow Answer

Which of the following is recommended as the preferred accounting treatment for excess on acquisition?

Correct AnswerverifiedShow Answer

Purchased computer software should be:

Correct AnswerverifiedShow Answer

What criteria must be demonstrated by an entity for the recognition of an item as an intangible asset?

Correct AnswerverifiedShow Answer

When the value of an intangible asset is impaired,the change in the value of the asset is:

Correct AnswerverifiedShow Answer

AASB 138 requires that entities classify their intangible assets into those with finite lives and those with indefinite lives.Which of these is a factor that tends to limit the useful life of intangible assets?

Correct AnswerverifiedD

Which accounting standard distinguishes between intangible assets and goodwill?

Correct AnswerverifiedShow Answer

The main reason why accounting for intangible assets is more difficult than accounting for other assets is:

Correct AnswerverifiedShow Answer

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Most textbooks that include a section on...
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D

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B

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Research and development may result in t...
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D

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