Exam 16: Intangible Assets

Star Valley Entity just purchased Waterton Canyon Entity along with its patented technology for $105 million. The fair value of the company excluding the patent is $70 million. The patent's fair value is $20 million. What intangible assets should Star Valley record?

Shappirim Palms developed a new brand name and trademarked it. It wasn't initially clear but it soon became clear that the expected future economic benefits attributable to the brand name will most likely flow to the entity. In fact, the economic benefits resulting from the brand name will soon surpass prior expectations. The cost of the brand name can be reliably measured. The CFO tells you that the brand name can be recognized as an identifiable, intangible asset now that the future economic benefits are more probable.

All costs incurred during the research phase are recognized as expenses in profit or loss.

An entity may elect to apply the revaluation model to measure the intangible asset at fair value

Chatton Wooler-Scots Chemical located in Berwick-Upon-Tweed created a new chemical. Research and development costs were indistinguishable during its creation. The new chemical is called Chromoethylene, and it is used to increase the strength and UV resistance of plastics. Chatton Wooler-Scots uses the revaluation model of accounting for intangible assets. Chromoethylene was patented three years ago for 50 years. The new patent was originally valued at ₤4.5 billion and has increased in fair market value from ₤4.5 billion to ₤5 billion during the last year. Accumulated amortization is ₤270 million. Chatton Wooler-Scots uses the straight-line method of amortization. Prepare journal entries using the proportional restatement and eliminating amortization methods.

Word processors software would be considered a tangible asset.

Which of the following intangible assets are not amortized?

Soaring Entity (UE) developed a successful brand for a line of custom-made para-gliders. SE is able to charge a premium for its products because of its superior reputation. SE spends large amounts of money on developing, marketing, and maintaining the brand. Explain why or why not the definition of an intangible asset has been met.