Question 1

Discuss the accounting requirements in AASB 138 for separately acquired intangible assets.

Accepted Answer

For a separately acquired intangible,such as an individual copyright,registered trademark or licence acquired from another entity,AASB 138 para.25 notes that the price paid would reflect expectations about the probability of future economic benefits and that those expectations would be reflected in the cost of the asset.Hence,the standard specifies that the probability recognition criterion would always be considered to be satisfied for separately acquired intangible assets.In addition,the cost of a separately acquired intangible asset would normally be capable of reliable measurement,especially when the purchase consideration is in the form of cash or other monetary assets (para.26).In initially measuring a separately acquired intangible asset,cost comprises (para.27): -purchase price,including import duties and non- refundable purchase taxes,after deducting trade discounts and rebates; and -any directly attributable costs of preparing the asset for its intended use.

Question 2

Which of the following is not an example of a development activity?

Accepted Answer

A) the design,construction and operation of a pilot plant that is not of a scale economically feasible for commercial production 
B) the design,construction and testing of pre- production or pre- use prototypes and models 
C) the search for,evaluation and final selection of,applications of research findings or other knowledge 
D) the design of tools,jigs,moulds and dies involving new technology 
A) the design,construction and operation of a pilot plant that is not of a scale economically feasible for commercial production 
B) the design,construction and testing of pre- production or pre- use prototypes and models 
C) the search for,evaluation and final selection of,applications of research findings or other knowledge 
D) the design of tools,jigs,moulds and dies involving new technology C

Question 3

Identify some of the factors to be considered in determining the useful life of an intangible asset.

Accepted Answer

Many factors are considered in determining the useful life of an intangible asset, including:
(a)	the expected usage of the asset by the entity and whether the asset could be managed efficiently by another management team;
(b)	typical product life cycles for the asset and public information on estimates of useful lives of similar assets that are used in a similar way;
(c)	technical, technological, commercial or other types of obsolescence;
(d)	the stability of the industry in which the asset operates and changes in the market demand for the products or services output from the asset;
(e)	expected actions by competitors or potential competitors;
(f)	the level of maintenance expenditure required to obtain the expected future economic benefits from the asset and the entity's ability and intention to reach such a level;
(g)	the period of control over the asset and legal or similar limits on the use of the asset, such as the expiry dates of related leases; and
(h)	whether the useful life of the asset is dependent on the useful life of other assets of the entity.

Question 4

AASB 138 requires an entity to choose between which models for intangible assets subsequent to their initial recognition?

Accepted Answer

A) cost and revaluation models 
B) revaluation and recoverable amount models 
C) cost and recoverable amount models 
D) none of the above 
A) cost and revaluation models 
B) revaluation and recoverable amount models 
C) cost and recoverable amount models 
D) none of the above

Question 5

An intangible shall be recognised if,and only if:

Accepted Answer

A) it is possible that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably 
B) it is possible that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset cannot be measured reliably 
C) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset cannot be measured reliably 
D) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably 
A) it is possible that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably 
B) it is possible that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset cannot be measured reliably 
C) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset cannot be measured reliably 
D) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably

Question 6

The systematic allocation of the depreciable amount of an intangible asset over its useful life is referred to as:

Accepted Answer

A) write- down 
B) derecognition 
C) depreciation 
D) amortisation 
A) write- down 
B) derecognition 
C) depreciation 
D) amortisation

Question 7

The most reliable estimate of the fair value of an intangible asset is:

Accepted Answer

A) expert valuations of market values 
B) quoted market prices in an active market 
C) quoted market prices in an inactive market 
D) present values of future net cash flows 
A) expert valuations of market values 
B) quoted market prices in an active market 
C) quoted market prices in an inactive market 
D) present values of future net cash flows

Question 8

The criteria in AASB 138 identified as being necessary for an intangible asset arising from development to be recognised include:

Accepted Answer

A) the entity's ability to use or sell the intangible asset 
B) the entity's intention to complete the intangible asset and use or sell it 
C) the entity's ability to measure reliably the expenditure attributable to the intangible asset during its development 
D) all of the above 
A) the entity's ability to use or sell the intangible asset 
B) the entity's intention to complete the intangible asset and use or sell it 
C) the entity's ability to measure reliably the expenditure attributable to the intangible asset during its development 
D) all of the above

Question 9

Discuss the guidance given in AASB 138 regarding the estimation of the fair value of intangible assets.

Accepted Answer

Quoted market prices in an active market

Question 10

Examples of research activities include:

Accepted Answer

A) activities aimed at obtaining new knowledge 
B) the formulation,design,evaluation and final selection of possible alternatives for new or improved materials,devices,products,processes,systems or services 
C) the search for alternatives for materials,devices,products,processes,systems or services 
D) all of the above 
A) activities aimed at obtaining new knowledge 
B) the formulation,design,evaluation and final selection of possible alternatives for new or improved materials,devices,products,processes,systems or services 
C) the search for alternatives for materials,devices,products,processes,systems or services 
D) all of the above

Question 11

Explain the difference between research and development.and provide examples of each.

Accepted Answer

Research is defined in AASB 138 as "orig

Question 12

Techniques to be used to estimate the fair values of intangible assets include:

Accepted Answer

A) estimating the costs the entity avoids by owning the assets 
B) discounting estimated future net cash flows from the assets 
C) both A and B 
D) none of the above 
A) estimating the costs the entity avoids by owning the assets 
B) discounting estimated future net cash flows from the assets 
C) both A and B 
D) none of the above

Question 13

The factors considered in determining the useful life of an intangible asset include:

Accepted Answer

A) technical,technological,commercial or other types of obsolescence 
B) typical product life cycles for the asset 
C) expected actions by competitors or potential competitors 
D) all of the above 
A) technical,technological,commercial or other types of obsolescence 
B) typical product life cycles for the asset 
C) expected actions by competitors or potential competitors 
D) all of the above

Question 14

Which of the following statements regarding AASB 138 is incorrect?

Accepted Answer

A) it requires expenditure on research or on the research phase of an internal project must be expensed when incurred 
B) it specifically prohibits the recognition of internally generated brands,mastheads,publishing titles,customer lists and items similar in substance as intangible assets 
C) it allows,in certain circumstances,the recognition of an intangible asset arising from development or from the development phase of an internal project 
D) it allows expenditure on research or on the research phase of an internal project to be capitalised as an asset subject to certain criteria 
A) it requires expenditure on research or on the research phase of an internal project must be expensed when incurred 
B) it specifically prohibits the recognition of internally generated brands,mastheads,publishing titles,customer lists and items similar in substance as intangible assets 
C) it allows,in certain circumstances,the recognition of an intangible asset arising from development or from the development phase of an internal project 
D) it allows expenditure on research or on the research phase of an internal project to be capitalised as an asset subject to certain criteria

Question 15

Identify the tests contained in AASB 138 for the recognition of intangible assets arising from development.

Accepted Answer

An intangible asset arising from develop

Question 16

Which of the following is not included in the cost of an internally generated intangible asset?

Accepted Answer

A) costs of materials and services used or consumed in generating the intangible asset 
B) fees to register a legal right 
C) expenditure on training staff to operate the asset 
D) amortisation of patents and licences that are used to generate the intangible asset 
A) costs of materials and services used or consumed in generating the intangible asset 
B) fees to register a legal right 
C) expenditure on training staff to operate the asset 
D) amortisation of patents and licences that are used to generate the intangible asset

Question 17

Examples of expenditures that are not part of the cost of an intangible asset include:

Accepted Answer

A) costs of testing that the asset is functioning properly 
B) costs of employee benefits arising directly from bringing the asset to its working condition 
C) costs of conducting business in a new location or with a new class of customer 
D) none of the above 
A) costs of testing that the asset is functioning properly 
B) costs of employee benefits arising directly from bringing the asset to its working condition 
C) costs of conducting business in a new location or with a new class of customer 
D) none of the above

Question 18

The future economic benefits expected,or hoped,to arise from those internal activities are called:

Accepted Answer

A) externally generated goodwill 
B) internally generated goodwill 
C) reputation goodwill 
D) equity goodwill 
A) externally generated goodwill 
B) internally generated goodwill 
C) reputation goodwill 
D) equity goodwill

Question 19

Examples of intangible assets include:

Accepted Answer

A) intellectual property 
B) customer lists 
C) trademarks 
D) all of the above 
A) intellectual property 
B) customer lists 
C) trademarks 
D) all of the above

Question 20

Discuss the cost and revaluation models under AASB 138.

Accepted Answer

Consistent with the accounting treatment

Exam 8: Intangible Assets

Discuss the accounting requirements in AASB 138 for separately acquired intangible assets.

Which of the following is not an example of a development activity?

Identify some of the factors to be considered in determining the useful life of an intangible asset.

AASB 138 requires an entity to choose between which models for intangible assets subsequent to their initial recognition?

An intangible shall be recognised if,and only if:

The systematic allocation of the depreciable amount of an intangible asset over its useful life is referred to as:

The most reliable estimate of the fair value of an intangible asset is:

The criteria in AASB 138 identified as being necessary for an intangible asset arising from development to be recognised include:

Discuss the guidance given in AASB 138 regarding the estimation of the fair value of intangible assets.

Examples of research activities include:

Explain the difference between research and development.and provide examples of each.

Techniques to be used to estimate the fair values of intangible assets include:

The factors considered in determining the useful life of an intangible asset include:

Which of the following statements regarding AASB 138 is incorrect?

Identify the tests contained in AASB 138 for the recognition of intangible assets arising from development.

Which of the following is not included in the cost of an internally generated intangible asset?

Examples of expenditures that are not part of the cost of an intangible asset include:

The future economic benefits expected,or hoped,to arise from those internal activities are called:

Examples of intangible assets include:

Discuss the cost and revaluation models under AASB 138.

The Nature and Environment of Companies

Company Formation, Share Capital and Debt Securities

Reserves and Profit Distribution

Published Financial Statements

Accounting for Company Income Tax

Property, Plant and Equipment

Leases

Business Combinations

Impairment of Assets

Additional Accounting Standards and Disclosures

Principles of Consolidation

Consolidation: Intragroup Transactions

Consolidation: Non-Controlling Interests

Consolidation: Indirect Non-Controlling Interests

Accounting for Associates

Accounting for Joint Ventures

Accounting for Foreign Currency

Capital Reorganisation

External Administration, Including Liquidation

Key Issues in Australian Corporate Governance

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