Advanced Accounting
14th Edition
ISBN: 9781260247824
Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik
Publisher: RENT MCG
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Question
Chapter 2, Problem 22P
a.
To determine
Describe the criteria for determining whether an intangible asset acquired in a business combination should be separately recognized apart from
b.
To determine
Identify which recognition criteria (separability and legal/contractual) may or may not apply in recognizing the intangible on the acquiring firm’s financial statements.
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Students have asked these similar questions
Which of the following is/are not capitalized as an intangible asset?
Select one:
a. Legal costs to defend a patent successfully and goodwill acquired when a company purchases another company.
b. Costs of an internally developed patent and goodwill acquired when a company purchases another company.
c. Costs of an internally developed patent and legal costs to defend a patent successfully.
d. Goodwill acquired when a company purchases another company and costs to purchase a patent.
e. Costs to purchase a patent and legal costs to defend a patent successfully.
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
Statement I: An internally generated goodwill shall not be recognized as an intangible asset.Statement II: In amortizing intangible asset, the appropriate method is the straight-line method, unless the pattern in which the asset’s economic benefits are consumed by the enterprise can be determined reliably.Statement III: Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance should be recognized as intangible assets.Which of the following statements are true?
I and III only
I, II and III
I and II only
II and III only
Chapter 2 Solutions
Advanced Accounting
Ch. 2 - Prob. 1QCh. 2 - Describe the concept of a synergy. What are some...Ch. 2 - Prob. 3QCh. 2 - What does the term consolidated financial...Ch. 2 - Within the consolidation process, what is the...Ch. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Which of the following does not represent a...Ch. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4PCh. 2 - Prob. 5PCh. 2 - Prob. 6PCh. 2 - Prob. 7PCh. 2 - When does gain recognition accompany a business...Ch. 2 - Prob. 9PCh. 2 - Prob. 10PCh. 2 - Prob. 11PCh. 2 - On June 1, Cline Co. paid 800,000 cash for all of...Ch. 2 - On May 1, Donovan Company reported the following...Ch. 2 - Prob. 14PCh. 2 - Prob. 15PCh. 2 - Prob. 16PCh. 2 - Prob. 17PCh. 2 - On its acquisition-date consolidated balance...Ch. 2 - On its acquisition-date consolidated balance...Ch. 2 - Prob. 20PCh. 2 - Prob. 21PCh. 2 - Prob. 22PCh. 2 - The following book and fair values were available...Ch. 2 - Prob. 24PCh. 2 - Prob. 25PCh. 2 - Prob. 26PCh. 2 - Prob. 27PCh. 2 - Prob. 28PCh. 2 - SafeData Corporation has the following account...Ch. 2 - Prob. 34PCh. 2 - Prob. 35PCh. 2 - Prob. 39APBCh. 2 - Prob. 40APB
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- Costs associated with various intangibles of a company may either be expensed when incurred or capitalized and amortized. Indicate how each of the following costs should be recorded. Options: - Charged to franchise account and amortized - Charged to patent account and amortized - Charged to appropriate asset accounts and amortized - Charged to expense when incurred 1. Initial fee to acquire a franchise 2. Design, construction, and testing of preproduction prototypes and models 3. Legal costs incurred in connection with a successful patent application 4. Laboratory research aimed at discovery of new knowledge 5. Cost of purchased equipment that will be used in a series of R&D projects over a ten-year period 6. Legal costs of the initial incorporation of a business 7. Cost of a long-term lease of land containing mineral deposits 8. Annual service fee paid to the franchiser's headquarters for administrative services rendered to the…arrow_forward1.compute the amount of goodwill acquired 2.Record the acquisition in a financial statements model. Arizona Corporation’s financial condition just prior to the acquisition is shown in the financial statements model 3.Record the acquisition in general journal formatarrow_forwardChoose the correct. An acquired firm’s financial records sometimes show goodwill from previous business combinations. How does a parent company account for the preexisting goodwill of its newly acquired subsidiary?a. The parent tests the preexisting goodwill for impairment before recording the goodwill as part of the acquisition.b. The parent includes the preexisting goodwill as an identified intangible asset acquired.c. The parent ignores preexisting subsidiary goodwill and allocates the subsidiary’s fair value among the separately identifiable assets acquired and liabilities assumed.d. Preexisting goodwill is excluded from the identifiable assets acquired unless the subsidiary can demonstrate its continuing value.arrow_forward
- Which of the following statements concerning Intangible assets are TRUE?(In your answer, provide the appropriate letter(s) A – E for each statement believed to be true)A. Goodwill can never be recognisedB. Only purchased intangibles can be recognisedC. Intangibles are amortised over their useful life where the life is finiteD. Research expenditure is expensedE. A brand name may be recognised when one business acquires anotherarrow_forwardThe brand name of hand sanitizers has acquired by the company as part of another company acquisition. Does this fulfil the criteria to be recognised as intangible assets as per the provision of IAS 38? Explain.arrow_forwardWhich of the following statements is/are true concerning property, plant and equipment (PPE)?I. PPE acquired by donation should be recorded at the fair value of the donated asset at the time of donation. II. When a group of assets is acquired for a lump-sum price, the total cost should be allocated to the individual assets based on their carrying amounts.III. Property acquired in exchange for shares or other securities in the enterprise should always be recorded the fair value of the securities issued.IV. When a property is acquired in exchange for another asset and both the fair value of the asset given up and the asset received are clearly determinable, its cost is usually determined by reference to the fair value of the asset given up. V. When an asset is acquired under a deferred payment plan, the asset is recorded at its cash equivalent price. If the cash equivalent price is not reliably determinable, the asset cost if the total of the undiscounted future cash payments required by…arrow_forward
- Which of the following statements are correct? I. IAS 16 Property, plant and equipment requires entities to disclose the purchase date of each asset II. The carrying amount of a non-current asset is the cost or valuation of that asset less accumulated depreciation III. IAS 16 Property, plant and equipment permits entities to make a transfer from the revaluation surplus to retained earnings for excess depreciation on revalue assets IV. Once decided, the useful life of a non-current asset should not be changedarrow_forwardDuring the measurement period, which of the following may affect the amount of goodwill from business combination? a. New information regarding estimates in the contingent consideration b. New information regarding estimates in the contingent consideration that are existing at the date of acquisition. c. Nothing can affect the amount of goodwill. d. New information regarding estimates in the contingent consideration that are not existing at the date of acquisitionarrow_forwardIndicate whether each of the following statements is true or false. If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent may be amortized over the life of the new patent. If the recoverable amount of an indefinite-life intangible other than goodwill is less than its carrying value, an impairment loss must be recognized. Research and development costs are recorded as an intangible asset if it is felt they will provide economic benefits in future years.arrow_forward
- Examples of intangible assets include: Select one alternative: loyal customers patents trademarks All of the given answers are correctarrow_forwardAn entity that acquires an intangible asset may use the revaluation modelfor subsequent measurement only if A. The useful life of the intangible asset can be reliably determined.B. An active market exists for the intangible asset.C. The cost of the intangible asset can be measured reliably.D. The intangible asset is a monetary asset.arrow_forwardIndicate whether each of the following statements is true or false. Goodwill can only arise from a third-party purchase of another company’s net assets. Under IFRS, indefinite-life intangibles are treated the same way as definite-life intangibles regarding impairment evaluation but not measurement. Under IFRS, goodwill impairment reversals are not allowed unless the goodwill is internally developed.arrow_forward
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