ADMS 3585 Chapter 12 Study Sheet.docx

ADMS 3585 Chapter 12 Study Sheet.docx - ADMS 3585 Chapter...

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ADMS 3585 Chapter 12 Study Sheet Goodwill cannot be internally developed Internally generated Intangibles IFRS requires that costs be capitalized when certain criteria are met, and expense all other costs ASPE also allows for an accounting policy option to expense all costs relating to internally generated intangibles Two phases: Research activities: involve planned search or critical investigation aimed at discovery of new knowledge may or may not be directed towards a specific project All research costs are charged to expense when incurred Development activities include: translation of research findings or other knowledge into a plan or design for a new product or process, or significant improvement to an existing product or process Development costs are charged to expense except in certain defined circumstances Development cost capitalization criteria: 1. Technical feasibility 2. Intent to complete for use or sale 3. Ability to use or sell 4. Availability of resources (technical, financial, and other) needed to complete, and to use or sell 5. If the intent is to sell, a market exists and is clearly defined; if the intent is to use, there is a definable use/need 6. The ability to reliably measure the costs associated with the intangible asset during its development Development Costs: 1. Materials and services consumed 2. Direct personnel costs (e.g., salaries) 3. Fees needed to register a legal right 4. Amortization of other intangibles needed to generate the asset 5. Interest and borrowing costs Measuring Intangible Assets Two Models: Cost Model (CM), only model allowed in ASPE Revaluation Model (RM) Both are applied in the same way as PP&E Limited Life Intangibles
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