EXERCISE 11–1 Indicate whether the items below are to be capitalized as an intangible asset or expensed. Which account(s) would each item be recorded to?   Salaries of research staff Costs to test prototypes Borrowing costs for development of a qualifying intangible asset Executive salaries for time spent on development

EXERCISE 11–1 Indicate whether the items below are to be capitalized as an intangible asset or expensed. Which account(s) would each item be recorded to?

1. Salaries of research staff
2. Costs to test prototypes
3. Borrowing costs for development of a qualifying intangible asset
4. Executive salaries for time spent on development of an intangible asset
5. Costs to launch a new product
6. Purchase cost of a patent from a third party
7. Product research costs
8. Costs internally incurred to create goodwill
9. Legal costs to successfully defend a patent
10. Purchase price of new software
11. Training costs for new software
12. Direct costs of special programming needed when purchasing new software
13. Costs incurred in forming a corporation for purposes of commercializing a new product
14. Operating losses incurred in the start-up of a business to manufacture a patented produce
15. The purchase cost of a franchise
16. The cost of developing a patent
17. The cost of purchasing a patent from an inventor
18. Legal costs incurred in securing a patent
19. The cost of purchasing a copyright
20. Product development costs
21. Consulting fees paid to a third party for advice on a research project 418 Intangible Assets and Goodwill
22. The cost of an annual update on payroll software
23. Interest or borrowing costs specifically identifiable with an internally developed intangible asset
24. Materials consumed in the development of a product at the manufacturing stage for an IFRS company y. Materials consumed in research projects
25. General borrowing costs on the company’s line of credit