Which of the following sets represents a false relationship regarding the accounting for the cost of intangibles according to GAAP? Set Category Account for cost by I. Purchased identifiable intangibles Capitalize costs II. Purchased unidentifiable intangibles Capitalize costs III. Internally developed identifiable intangibles Capitalize costs IV. Internally developed unidentifiable intangibles Expense costs Set III Set IV Set II Set I

Which of the following sets represents a false relationship regarding the accounting for the cost of intangibles according to GAAP? Set Category Account for cost by I. Purchased identifiable intangibles Capitalize costs II. Purchased unidentifiable intangibles Capitalize costs III. Internally developed identifiable intangibles Capitalize costs IV. Internally developed unidentifiable intangibles Expense costs Set III Set IV Set II Set I

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter12: Auditing Long-lived Assets And Merger And Acquisition Activity

Section: Chapter Questions

Problem 8CYBK

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According to PAS 38, which of the following may be recognized as cost of intangible asset?a. Research costs incurred in self-generating an intangible assetb. Costs of an internally generated customer listsc. Purchase cost of an externally acquired publishing titled. Abnormal amount of wasted labor in self-generating an intangible asset Which of the following statements is correct?a. Some intangible assets have physical substance.b. Intangible assets are always classified as noncurrent assets even in cases where they are part of a disposal group.c. The process of recording the expiration of the economic benefits of an intangible asset is called depletion.d. Intangible assets can be obtained in one of two ways – external acquisition or internal development. Which of the following statements is true?a. The capitalizable costs of patents are legal fees and other registration costs.b. An identifiable tangible asset developed internally is never recognized in the accounts as an asset.c.…
Which of the following expenditures cannot be included in R&D costs? a. indirect costsb. intangibles purchased from othersc. personnel costsd. contract services performed for others
Which of the following costs incurred internally to create an intangible asset is generallyexpensed? a. Research and development costs.b. Filing costs.c. Legal costs.d. All of the above.
Explain the difference in the accounting treatment of costs incurred to purchaseintangible assets versus the costs incurred to internally develop intangible assets
1. What are the two main characteristics of intangible assets? 2. Why does the accounting profession make a distinction between internally created intangibles and purchased intangibles? 3. What are the factors to be considered in estimating the useful life of an intangible asset? 4. What is the nature of research and development cost? 5. Indicate the proper accounting form the following items. Organization Cost Advertising Cost Operating Losses
Which one of the following internally-generated items may be eligible for capitalization as intangible assets in accordance with IAS 38 Intangible Assets? (Ignore business combinations.) Select one: a. Goodwill b. A pre-production prototype c. The cost of researching new material d. A customer list
The least effective means for the auditor to determine whether a recorded intangible asset possesses the characteristic of an asset is a. Vouch the purchase by reference to underlying documentation. b. Inquire as to the status of the patent application. c. Evaluate the future revenue-producing capacity of the intangible asset. d. Analyze the research and development expenditures to determine that only those expenditures possessing future economic benefits have been capitalized.
Which of the following statements is/are FALSE: I. Following the acquisition of an item of property, plant and equipment, subsequent expenditure for this item that will extend the asset’s useful life and increase the asset’s capacity is capitalised. II. Investment property does not get depreciated, unless it is measured at cost. III. In the statement of comprehensive income, costs can be analysed according to function or nature. Costs analysed according to function are classified into the following categories: distribution & selling costs; administrative expenses; other operating expenses (or income). IV. Because of the prudence convention, inventories are expensed in the income statement as cost of goods sold when they are sold, and not when they are bought in by the business and paid for. V. A complete set of financial statements consists of the statement of financial position, the statement of comprehensive income, the statement of changes in equity and the statement of…
Which of the following statements is correct? Question 1 options: a Some intangible assets have physical substance b Intangible assets are always classified as noncurrent assets even in cases where they are part of a disposal group. c The process of recording the expiration of the economic benefits of an intangible asset is called depletion. d Intangible assets can be obtained in one of two ways – external acquisition or internal development
Which statement is INCORRECT about subsequent measurement of intangible assets? Q7 Select one: a. When using the cost model an entity should estimate the estimated useful life as well as the estimated residual value if the asset is determined to have an indefinite useful life b. When using the cost model an entity should estimate the estimated useful life as well as the estimated residual value if the asset is determined to have a definite useful life. c. The same model chosen by an entity should be used for all intangible assets in the same class. d. Intangible assets may be measured using either the cost model or the revalued cost model.
Explain how the accounting treatment differs between purchased and internally developed intangible assets.
In order to determine usefulness of intangibles, investigation and the examination of income data related to the asset will be of assistance. True or False?

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Set	Category	Account for cost by
I.	Purchased identifiable intangibles	Capitalize costs
II.	Purchased unidentifiable intangibles	Capitalize costs
III.	Internally developed identifiable intangibles	Capitalize costs
IV.	Internally developed unidentifiable intangibles	Expense costs