Chat with AIExam 9: Intangible Assets, Goodwill, Mineral Resources, and Government Grants
Explain the difference in recognition of externally acquired intangibles versus internally developed intangibles.
(36) 
Verified•Ultimately, whether and how an enterprise satisfies the recognition criteria depends on the way it obtains the intangible asset: whether it acquires it externally or develops the intangible asset internally.
•Acquired intangibles readily satisfy the recognition and measurement criteria: IFRS presumes that (i)intangibles acquired from arm's-length parties meet the criterion of having probable future benefits, and that (ii)such benefits can be measured reliably.
•Internally developed intangibles must meet more stringent criteria. IAS 38 identifies two distinct stages for internally developed intangibles: a research phase and a development phase. The costs incurred in the research phase must be expensed because the activities do not relate to an identifiable product or process. Development activities are further advanced than research in terms of commercially viable products or processes. Therefore, it is possible to satisfy the criterion of probable future benefits. However, not all costs incurred in the development phase qualify for capitalization. IAS 38 provides a further list of six criteria for the capitalization of development costs.
•The difference is due to the lower reliability of measuring the benefits of internally developed intangibles, and the greater possibility of management bias in developing the estimates of those benefits
In 2012, StartUp Inc. (SU)set up a new manufacturing facility in Manitoba. To encourage SU to set up its factory, the province provided equipment with a fair market value of $45,000 and an estimated useful life of 5 years using straight-line depreciation. What journal entry would be required in fiscal 2013, if the net method is used?
(34) VerifiedA
Explain the difference between indefinite lived and finite lived intangible assets.
(37) Verified•An intangible asset has an indefinite life if the enterprise expects that the asset will maintain its level of benefits for the foreseeable future. Such assets are not amortized.
•Enterprises should amortize intangible assets with finite lives over their estimated useful lives. Generally, enterprises should assume nil residual values and use the straight-line method for amortization, unless they can provide reliable evidence to the contrary.
Which statement is correct about indefinite lived intangible assets?
(32) Growth Corp., a publicly accountable entity, purchased a company with the following assets and liabilities for $97,000: 
Which of the following is not correct?
Which of the following is not correct? (36) Explain how government grants are accounted for and presented in the financial statements.
(38) Which of the following is NOT a "class" of intangible assets?
(37) Growth Corp., a publicly accountable entity, purchased a company with the following assets and liabilities for $100,000: 
Which of the following is not correct about the difference between carrying value and fair value?
Which of the following is not correct about the difference between carrying value and fair value? (35) A professional sports team and related items (including a stadium)were bought by an exceedingly wealthy investor and sports fan. The negotiated price was $225,000,000. Details of what was purchased and the agreed fair values are as follows:
The team has been less than successful in its professional sports league and has been recording losses of $1,000,000 to $8,000,000 per year on its audited financial statements for the past five years. It was these losses that prompted the last owner to sell the team and related assets.
Required:
a. Of the $225 million purchase price, how much of it relates to tangible assets? What percentage of the purchase price relates to tangible assets?
b. Describe the nature of the future economic benefits associated with each of the intangible assets acquired. For example, for the cablevision broadcasting contract, this would be the present value of the future payments expected from contracts for the broadcast of games on cablevision channels plus potential renewal contracts thereafter.
The team has been less than successful in its professional sports league and has been recording losses of $1,000,000 to $8,000,000 per year on its audited financial statements for the past five years. It was these losses that prompted the last owner to sell the team and related assets.
Required:
a. Of the $225 million purchase price, how much of it relates to tangible assets? What percentage of the purchase price relates to tangible assets?
b. Describe the nature of the future economic benefits associated with each of the intangible assets acquired. For example, for the cablevision broadcasting contract, this would be the present value of the future payments expected from contracts for the broadcast of games on cablevision channels plus potential renewal contracts thereafter. (36) A professional sports team and related items (including a stadium)were bought by an exceedingly wealthy investor and sports fan. The negotiated price was $225,000,000. Details of what was purchased and the agreed fair values are as follows:
The team has been less than successful in its professional sports league and has been recording losses of $1,000,000 to $8,000,000 per year on its audited financial statements for the past five years. It was these losses that prompted the last owner to sell the team and related assets.
Required:
a. There are several identifiable intangible assets noted on the list. Group these assets into three classes, being those that are
(i)easily measurable and identifiable;
(ii)reasonably measurable and identifiable; and
(iii)very difficult to measure and identify.
For each group, what common quality or feature of these items distinguishes their classification?
b. While all the items can be assigned a value, would you capitalize all these amounts?
Explain your conclusion.
The team has been less than successful in its professional sports league and has been recording losses of $1,000,000 to $8,000,000 per year on its audited financial statements for the past five years. It was these losses that prompted the last owner to sell the team and related assets.
Required:
a. There are several identifiable intangible assets noted on the list. Group these assets into three classes, being those that are
(i)easily measurable and identifiable;
(ii)reasonably measurable and identifiable; and
(iii)very difficult to measure and identify.
For each group, what common quality or feature of these items distinguishes their classification?
b. While all the items can be assigned a value, would you capitalize all these amounts?
Explain your conclusion. (37) Which of the following is not a difference between intangible assets and property, plant and equipment (PPE)?
(39) Which of the following is a difference between intangible assets and property, plant, and equipment (PPE)?
(38) Which criteria under IAS 38 would be met if the "project plan outlines the feasibility and timeline of the project"?
(35) In 2012, New Wave Inc. (NW)set up a new manufacturing facility in Manitoba. To encourage NW to set up its factory, the province provided equipment with a fair value of $75,000 and an estimated useful life of 10 years using straight-line depreciation. What journal entry would be required to record the equipment contribution in fiscal 2012, using the net method?
(28) GoodResources incurred the following costs: 
How much would be capitalized as "property, plant or equipment" under the successful efforts method?
How much would be capitalized as "property, plant or equipment" under the successful efforts method? (37) Below are several intangible assets. For each case suggest whether the item should be amortized. If amortization is recommended, what is the useful life that it should be amortized over? Provide justification for your recommendation.
a. Aye Corp purchased a brand name for $1,000,000. The firm has the exclusive right to use this name forever.
b. Bee Corp has developed a strong corporate reputation and its products are highly sought-after in the luxury goods market. Last year, $40,000,000 was spent on advertising its brand in top-tier fashion magazines and at the top fashion shows around the world.
c. Cee Corp paid $25,000,000 for the five-year exclusive privilege to have a famous celebrity endorse and use the company's sports equipment. This contract entitles Cee to renew the contract for a further two-year exclusive endorsement arrangement for a fixed fee of $10,000,000, due midway through the last year of the current contract.
(42) What is the appropriate treatment for re-payment of government grants under ASPE?
(28) 
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