During the last decades it has not been unusual for the premium paid to acquire a company to be greater than the fair value of its tangible net assets. This increase in the relative proportions of intangible assets has made the accounting practices for them all the more important. During the same period many companies have spent a great deal of funds to internally develop new intangible assets such as software and brands. IAS 38 Intangible Assets prescribes the accounting treatment for intangible assets. Required: In accordance with IAS 38 Intangible Assets, discuss whether intangible assets should be recognized and if so how they should be initially recognized, and if so how they should be initially recorded and subsequently amortized in the following circumstances: 1. When they are purchased separately from other assets 2. When they are obtained as part of acquiring a business 3. When they are developed internally

During the last decades it has not been unusual for the premium paid to acquire a company to be greater than the fair value of its tangible net assets. This increase in the relative proportions of intangible assets has made the accounting practices for them all the more important. During the same period many companies have spent a great deal of funds to internally develop new intangible assets such as software and brands. IAS 38 Intangible Assets prescribes the accounting treatment for intangible assets. Required: In accordance with IAS 38 Intangible Assets, discuss whether intangible assets should be recognized and if so how they should be initially recognized, and if so how they should be initially recorded and subsequently amortized in the following circumstances: 1. When they are purchased separately from other assets 2. When they are obtained as part of acquiring a business 3. When they are developed internally

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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From page 7-1 of the VLN, acquisition cost would NOT include: A. Purchase price. B. Transportation cost to get the asset ready to be used. C. Sales taxes. D. Cost incurred to operate the asset.
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