Intangible Assets Quiz Questions

“A long-lived asset (asset group) shall be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.”

As discussed above, if indicators of impairment exist for an asset (group) to be held and used, an entity determines whether the sum of the estimated undiscounted future cash flows attributable to the asset (group) in question is less than its carrying amount. If those undiscounted cash flows are less than

In 2010, Bust-a-Knee paid MD International $15 million cash in exchange for its 100 percent ownership. A $15 million credit to the cash account indicates that Bust-a-Knee paid MD International that amount of cash at the date of transfer of the ownership. Ownership is treated as an intangible asset in this case. Intangible assets are non-physical assets that are acquired from others or developed internally by a company. Assets are the probable future economic benefits controlled by the company from past events or transactions. Intangible assets have similar characteristics with assets. Bust-a-Knee has control over MD International since equity had been transferred and will gain future economic profits because there are two in-process

not recoverable and exceeds its fair value. The carrying amount of a long-lived asset (asset group) is not

Assets are to be recorded and valued based of the type of asset there are.

Estimates of future cash flows used to test the recoverability of a long-lived asset group should be made for the remaining useful life of the asset group to the entity.

ii. Cisco’s purchased intangibles fall into one of two categories – those with finite lives and those with indefinite lives. Describe in your own works what these categories mean. How does the accounting for intangibles differ across these two types of intangible asset categories.

* There is cash flow loss that might causes continuing losses associated with the use of the asset

The current assets are those which are readily convertible into cash and cash equivalents due to their highly liquid nature and also form part of working capital of the company’s operations. However, the long term assets in contrast are not liquid because since they have a useful life of more than a year and hence their full value cannot be easily realized within

This is done by multiply the original percentage of allocation for costs, and then multiplying that by the costs incurred after technological feasibility has been established. The chart below shows a break-down of the capitalization of individual costs.

Over the past several years, there has been a growing controversy over the accounting issues of fair values and historical cost. The basis of this controversy revolves around which one of these principles is the most accurate. There are many different viewpoints on this issue. Many accounting professionals believe that fair value is just as accurate as the historical cost principle, while others believe that the historical cost is more reliable. The facts about each of these valuation methods will be researched and explained throughout this research document, as well as the different viewpoint about which method is the most accurate and reliable.

A company’s resources include two types: tangible and intangible. The former is asset that can be observed and counted, such as, office furniture, production equipment, computer, and warehouse, etc. Unlikely, the intangible resources are assets that are rooted deeply in the company’s history, accumulate over time, and are relatively difficult for competitors to learn and copy, such as brand, intellectual property and reputation, etc.

5. No debt assumption by Adecco, payments made to minority shareholders, and tax benefits due to Adecco US royalties.

* To reassess the identification and measurement of the acquiree’s identifiable assets, liabilities and contingent liabilities and the measurement of the cost of the business combination if the acquirer’s interest in the net fair value of the items recognised exceeds the cost of the combination. Any excess remaining after that reassessment must be recognised by the acquirer immediately in profit or loss.

The intangible asset will generate probable future economic benefits for the organization which can either be in the form of costs reduction or in the form of increasing revenue in the future for the organization.