Applied Management

2275 Words10 Pages
2/08/2013

Lecture 2 – Intangible assets ACCY 902, Semester 2, 2013
A/Professor Indra Abeysekera University of Wollongong, Australia

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A/Professor Indra Abeysekera

Deegan Chapter 8
Relevant accounting standards : AASB 138

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A/Professor Indra Abeysekera

Learning objectives
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Understand the classes of intangibles (internally-generated and purchased) and how to account for them Understand a special case of intangible – research and development, and how to account for them Understand a special case of intangible – goodwill, and how to account for them

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A/Professor Indra Abeysekera

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Definition of intangible assets
………………………………………. Includes patents, goodwill, mastheads, brand
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Determine amortisation expense: (a) A trademark at a cost of $1million. Trademark allows production of 10,000 units. During the year ended 30 June 2012, Shoreham Ltd produced 1,000 units. (b) The right to use the trade name 'Coca Cooler' in the local district for a cost of $700,000. It is more than 50 years old and is expected to be popular indefinitely. During the year ended 30 June 2012, it produced one-tenth of total estimated units, and the A/Professor Indra Abeysekera market price of the trade name was $650,000.

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Revaluation of intangibles
AASB 138—intangible assets may be revalued only if there is an ‘active market’ Only assets that have been acquired at cost can subsequently be revalued Active market defined as:

a market exhibiting all of the following: the items traded are homogeneous, willing buyers and sellers can normally be found, and prices are publicly available
It is ‘uncommon’ for active markets to exist for most intangible assets because of their unique nature
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Therefore, intangible assets can typically not be revalued – This has obvious implications for the
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