1. A newly set up dot-com entity has engaged you as its financial advisor. The entity has recently completed one of its highly publicized research and development projects and seeks your advice on the accuracy of the following statements made by one of its stakeholders. Which one is it? (a) Costs incurred during the “research phase” can be capitalized. (b) Costs incurred during the “development phase” can be capitalized if criteria such as technical feasibility of the project being established are met. (c) Training costs of technicians used in research can be capitalized. (d) Designing of jigs and tools qualify as research activities. 2. Which item listed below does not qualify as an intangible asset? (a) Computer software. (b) Registered patent. (c) Copyrights that are protected. (d) Notebook computer. 3. Which of the following items qualify as an intangible asset under IAS 38? (a) Advertising and promotion on the launch of a huge product. (b) College tuition fees paid to employees who decide to enroll in an executive M.B.A. program at Harvard University while working with the company. (c) Operating losses during the initial stages of the project. (d) Legal costs paid to intellectual property lawyers to register a patent. 4. Once recognized, intangible assets can be carried at (a) Cost less accumulated depreciation. (b) Cost less accumulated depreciation and less accumulated amortization. (c) Revalued amount less accumulated depreciation. (d) Cost plus a notional increase in fair value since the intangible asset is acquired. 5. Which of the following disclosures is not required by IAS 38? (a) Useful lives of the intangible assets. (b) Reconciliation of carrying amount at the beginning and the end of the year. (c) Contractual commitments for the acquisition of intangible assets. (d) Fair value of similar intangible assets used by its competitors.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. A newly set up dot-com entity has engaged you as its financial advisor. The entity has recently completed one of its highly publicized research and development projects and seeks your advice on the accuracy of the following statements made by one of its stakeholders. Which one is it? (a) Costs incurred during the “research phase” can be capitalized. (b) Costs incurred during the “development phase” can be capitalized if criteria such as technical feasibility of the project being established are met. (c) Training costs of technicians used in research can be capitalized. (d) Designing of jigs and tools qualify as research activities. 2. Which item listed below does not qualify as an intangible asset? (a) Computer software. (b) Registered patent. (c) Copyrights that are protected. (d) Notebook computer. 3. Which of the following items qualify as an intangible asset under IAS 38? (a) Advertising and promotion on the launch of a huge product. (b) College tuition fees paid to employees who decide to enroll in an executive M.B.A. program at Harvard University while working with the company. (c) Operating losses during the initial stages of the project. (d) Legal costs paid to intellectual property lawyers to register a patent. 4. Once recognized, intangible assets can be carried at (a) Cost less accumulated depreciation. (b) Cost less accumulated depreciation and less accumulated amortization. (c) Revalued amount less accumulated depreciation. (d) Cost plus a notional increase in fair value since the intangible asset is acquired. 5. Which of the following disclosures is not required by IAS 38? (a) Useful lives of the intangible assets. (b) Reconciliation of carrying amount at the beginning and the end of the year. (c) Contractual commitments for the acquisition of intangible assets. (d) Fair value of similar intangible assets used by its competitors.

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