Flashcards
Intangible & Impairment Losses -B
Cards in this deck (70)
- 1Asset must be :Controlled by the entity as a result of events in the past
Sometime from which the entity expects future economic benefit to flow. - 2Intnagible asset is measured at .......Intnagible asset is measured at fair value
- 3UnlessExchange transaction lacks commercial substance
FV of neither asset received nor the asset given up can be measured reliably - 4Internally generated goodwill recognised as an asset?NO
- 5Can Development costs be recognised?YES
Development costs can be recognised as an asset if they meet certain criteria. - 6FactorsTechnical feasibility of completing intangible asset
Intentional to completed the intangible asset and use it/sell it
Inttangible asset can be used to generate future economic benefits
Measure expenditure attributed to the intangible asset during its development. - 7Intangible asset can be used to generate future economic benefitsIntangible asset can be used to generate future economic benefits
TRUE - 8Research costs are not recognised as an asset FOR SOFP T/FResearch costs are not recognised as an asset,
TRUE - 9Research examplesActivities aimed at obtaining new knowledge !
The search for evaluation and final selection of application of research finding or other knowledge
Search for alternative for material devices product process system or services
Formulation design evaluation and final selection of possible alternatives for new or improved material devices products system or services - 10Development costs recognitionTechnical feasiblity of completing the intangible asset
It intention to complete the intangible asset
Ability to use or sell the intangible
Future economic benefits
Measure expenditure - 11Development examplesDesign contruction and testing of models and models
New techniooloy design
Pilot plant - 12Intangible asset should be measured at X but afterwards can be carried at cost or YIntangible asset should be measured at cost btu afterwards can be carried at cost or revalued amount
- 13Recongntion of an expense EXAMPLEsSTart up costs
Training costs
Advertising costs
Business relocation costs - 14Cost ModelIntangible asset carried at cost - amortionsation and impairment losses
- 15Revaluation modelIntangible asset to be carried at a revalued amoutn which is its fair v alue at the date of revlaution less any amortisaiton andd any subsequent impairment losses.
- 16Upwards ValueRevaluation surplus
- 17What if the revaluation surplus is a reversal of a revluation decrease previously charged as income?Recognised as income
- 18Downward revaluationExpense
- 19Finite useful life should be amortized /Un-amortisedFinite useful life should be amortize
- 20Indefinite :NO Amortization
- 21Goodwill:Create good relationships
Building a rep
Respondiing prompt and helpfully
Personality of the staff - 22Has Goodwill been paid for?NO
]
Goodwill is inherent in the business but it has not been paid for - 23When can goodwill be purchased?Purchased goodwill : busines is sold
- 24Purchased good will :Intangible non current asset
- 25How to value thisSeller and buyer agree on the and
Difference between purchase
consideration
and
own valuation - 26RECOVERABLE AMOUNT. Higher ofNET REALISABLE VALUE
(Fair value – cost of disposal)
AND
Value in use - 27Impairment :A fall in the value of an asset, so that its recoverable amount is now less than its carrying amount in statement of financial position.
- 28Carrying amount:The net value at which the asset is included in the statement of financial position
- 29Identifying a potential impairment assetExternal sources of financial
Fall in market value,
Change in environment
Interest in market interests
Carrying amount of the entity asset - 30What do you applyApply materiality
- 31IF active market :Fair value should be based on the market price
- 32No active market :Estimated FV
- 33Value in assetsi the present value of the future cash flows expected to be derived from an casset or cash generating unit.
- 34The rules for assets at historical costRecoverable amount of an asset is lower than the carrying amount, carrying amount should be reduced by the difference which should be charged as an expense in profit or loss
- 35The imapirment loss is to be treated as a X under the relevant IAS.The imapirment loss is to be treated as a revaluation decrease under the relevant IAS.
- 36This means:To the extent that there is a revaluation surplus held in respect of the asset, the impairment loss should be charged to Other Comprehensive Income
Any excess should be charged to profit or loss - 37The reversal of the impairment loss should be recognized immediately as Xincome in profit or loss for the year
- 38The carrying amount of the asset should be increased to its new X amountThe carrying amount of the asset should be increased to its new recoverable amount
- 39The asset cannot be revalued to a carrying amount that is higher than its value would have been if the asset had not been impaired orginally: TRUE OR FALSEThe asset cannot be revalued to a carrying amount that is higher than its value would have been if the asset had not been impaired orginally: i
TRUE - 40Exemption to the rule above isfor good will
- 41Cash generating unit is thesmallest identifiable group of assets for which independent cash flows can be identified and measured.
- 42Goodwill needs to be allocated to XCGU
- 43Each unit Good will allocated to CGU shouldRepresent the lowest level within the enttiy at which the goodwill is monitored for internal management purposes
Not to be larger than a reporting segmnet determined in accordance with IFRS 8 Operating segments - 44The carrying amount of the unit including goodwill is compared with the XThe carrying amount of the unit including goodwill is compared with the recoverable amount.
- 45Loss is applied First AgainstGoodwill
- 46AFTER THATThen
Non current asset son a PRO RATE BASIS - 47Loss should be recognized immediately: T/FLoss should be recognized immediately:
TRUE - 48SOFP IMPACTThe assets’s carrying amount should be reduced to its recoverable amount in the SOFP
- 49P/L IMPACTImpairment loss should be recognised immediately in profit ors losss
- 50The depreication charge on the asset sshould then be based on its X amount.The depreication charge on the asset sshould then be based on its new carrying amount.
- 51Allocating imapirmenss loss the carrying amount should not be reduced the higest ofFair value – cost of dispsosal
Value in use
0 - 52INTANGIBLE ASSETS ! What would prevent intangible asset beign capitalised?Unable to allocate
- 53When people feel successfulDevelopment costs stop.
- 54CARRYING FOR IMPAIRMENT LOSS CALCULATION STEP 1 : TOTAL IMPAIRMENTORIGINAL VALUE - RECOVERABLE AMOUNT
- 55STEP 2TOTAL IMPAIRMENT - CURRENT ASSETS - GOOD WILL
- 56STEP 3ADD THE TOTAL NON CURRENT ASSETS UP
REMEMBER TO DEDUCT ANY DAMAGE - 57STEP 4Pro rata.
Apply the non current assets to get the relevant % - 58STEP 5ANSWER IN STEP 2 * ANSWER IN STEP 4 FOR EVERY ASSET.
- 59HOW TO CALCULATE IMPAIRMENT LOSSCARRYING AMOUNT - RECOVERABLE AMOUNT
- 60VALUE IN LOSS = XPRESENT VALUE
- 61FOLLOWING IMPAIRMENT REVIEWJUST USE THE THREE COLUMN CALCULATION
MAKE SURE THE MIDDLE FIGURE ADDS UP TO THE AMOUNT IMPAIRED - 62IF CARRYING AMOUNT IS HIGHER THAN NRV THEN THERE IS A IMPAIRMENT LOSS T/FTRUE
- 63NEW ADDIITONS TO PPE SHOULD BE CALCULATED HOW?ADD ONTO THE CARRYIGN AMOUNT
- 64EXAMPLE OF INTNAGIBLE ASSETPATENT
LICIENSE - 65INTANGIBLE ASSET VALUEValue-(Value/Remainign Life)*(Months left/12
- 66Impairment of assets should be MONTHLY OR YEARLY OR EVERY 5 YEARSYEARLY
- 67DEVELOPMENT COSTS HOW ARE THEY TREATEDADDED INTO SPL
THEN CAPITALISED AND ADDED ONTO SOFP - 68IMPAIRMENT LOSS AFTER REVALUATIONIMPAIRMENT LOSS = ORIGINAL LOSS IF NO REVALUATIONS OCCURED.
DEDUCT THIS FIGURE FROM THE REVALUED AMOUNT. - 69Statement of Changes in Equity,Change in owners' equity over an accounting period by presenting the movement in reserves comprising the shareholders' equity.
- 70Example
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- Flashcards on Intangible & Impairment Losses -B, created by D A on 09/04/2019.
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