ACC210 Financial Reporting: Week 4, Intangibles Quiz 1.4

Question 1

The two key characteristics of intangible assets are that they are identifiable and that they:

Accepted Answer

lack physical substance;

Answer

have physical substance;

Answer

are monetary assets;

Answer

represent current obligations of the entity.

Question 2

The concept that distinguishes other intangible assets from goodwill is:

Accepted Answer

identifiability;

Answer

length of useful life;

Answer

lack of physical substance;

Answer

materiality.

Question 3

Items such as market knowledge, effective advertising programs, fundraising capabilities and trained staff are not regarded as assets because they:

Accepted Answer

are not controlled by the entity;

Answer

are monetary items;

Answer

cannot be measured;

Answer

are too difficult to manage.

Question 4

Under AASB 138 all expenditure on research activities must be:

Accepted Answer

expensed.

Answer

capitalised as a current asset;

Answer

capitalised as an intangible asset;

Answer

recognised directly in retained earnings;

Question 5

The recognition criteria that an asset must meet before it may be recognised and presented in the financial statements include:

Accepted Answer

a probability that future economic benefits will flow to the entity;

Answer

that the recognition of the asset is relevant to user decision making;

Answer

that the information about the asset is neutral;

Answer

a likelihood that the cost of the asset is verifiable.

Question 6

When measuring an intangible asset initially, which of the following valuation methods must be used?

Accepted Answer

cost;

Answer

acquisition price;

Answer

fair value;

Answer

market value.

Question 7

The cost of an intangible asset is comprised of the fair value of the consideration:

Accepted Answer

plus directly attributable costs.

Answer

less legal costs incurred in the purchase;

Answer

plus indirect costs;

Answer

less directly attributable costs;

Question 8

An intangible asset acquired through a business combination is initially measured at:

Accepted Answer

fair value;

Answer

cost;

Answer

net present value;

Answer

realisable value.

Question 9

Internally generated goodwill:

Accepted Answer

can be recognised when it is acquired as part of a business combination;

Answer

cannot be measured;

Answer

cannot be recognised;

Answer

is not identifiable.

Question 10

The original and planned investigation undertaken with the prospect of gaining new knowledge is described as:

Accepted Answer

research;

Answer

exploration;

Answer

development;

Answer

investigation.

Question 11

When a continuing project moves beyond the research stage it moves into a stage known as:

Accepted Answer

exploration;

Answer

acquisition;

Answer

development;

Answer

combination.

Question 12

From an accounting perspective, expenditure on development is:

Accepted Answer

capitalised as an intangible asset;

Answer

expensed as incurred;

Answer

regarded as a contingent asset and not capitalised;

Answer

recognised directly as a part of equity.

Question 13

When deciding whether to capitalise development expenditure as an intangible asset which of the following points must be satisfied? An entity must be able to demonstrate:
I. Its ability to sell the intangible asset.
II. Its intention to complete the intangible asset.
III. The technical feasibility of completing the intangible asset.
IV. Its ability to reliably measure the expenditure attributable to the intangible.

Accepted Answer

I, II, III and IV.

Answer

I, II and IV only;

Answer

I, III and IV only;

Answer

II, II and IV only;

Question 14

When capitalising development costs an entity:

Accepted Answer

may not reinstate any previously expensed costs;

Answer

may include all previous costs whether written off or current period costs;

Answer

may include all indirect and directly attributable costs;

Answer

may capitalise the sum of all related research and development costs.

Question 15

Which of the following intangibles may be capitalised by an entity?

Accepted Answer

Goodwill acquired in a business combination;

Answer

Internally generated mastheads;

Answer

Publishing titles developed within the entity;

Answer

Customer lists produced by the entity's marketing division.

Question 16

Johnson Limited spent the following amounts on an engineering project: $10 000 on research salaries; $15 000 on equipment for a research laboratory; $30 000 on project development costs; and $6 000 on marketing costs. The amount that may capitalised is:

Accepted Answer

$30 000.

Answer

$61 000;

Answer

$51 000;

Answer

$36 000;

Question 17

Subsequent to initial recognition of an intangible asset, an entity may choose to measure the item using the:

Accepted Answer

revaluation method;

Answer

gross method;

Answer

cash flow method;

Answer

net method.

Question 18

Under the revaluation method of measuring an intangible, the asset is carried at fair value and subject to charges for:

Accepted Answer

amortisation and impairment;

Answer

inflation in value;

Answer

interest expense;

Answer

increment in value.

Question 19

In circumstances where there is a revaluation decrement on revaluation of an intangible asset, any accumulated amortisation will be:

Accepted Answer

eliminated at the time of revaluation;

Answer

transferred immediately to a revaluation reserve account;

Answer

credited to profit or loss;

Answer

recognised as a gain on revaluation.

Question 20

When subsequent expenditure on intangible assets occurs the costs are:

Accepted Answer

immediately expensed.

Answer

recognised directly in retained earnings account.

Answer

transferred to a revaluation reserve account;

Answer

capitalised;

ACC210 Financial Reporting: Week 4, Intangibles Quiz 1.4

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