Intangible-Asset-Exercises.pdf - T or F Financial Assets...

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11/29/2016 1 T or F: Financial Assets representing legal rights or claims are intangible and are merely represented by certificates or contracts. IAS 38 should be applied. False. Par. 2 provides for the following exceptions on the scope of intangible assets: (a) intangible assets that are within the scope of another Standard; (b) financial assets, as defined in IAS 32 Financial Instruments: Presentation; (c) the recognition and measurement of exploration and evaluation assets (see IFRS 6 Exploration for and Evaluation of Mineral Resources); and (d) expenditure on the development and extraction of minerals, oil, natural gas and similar non-regenerative resources. 1 T or F: IAS 38 also applies to contractual rights arising from insurance contracts. These will there fore be capitalized as Insurance Contract Assets and amortised over the insurance term. False. Par. 3 lists down the specific types of intangible assets for which IAS 38 does not apply. (a) IA held for sale in the ordinary course of business - IAS 2 Inventories (b) deferred tax assets- IAS 12 Income Taxes (c) leases that are within the scope of IAS 17 Leases (d) assets arising from employee benefits - IAS 19 Employee Benefits (e) financial assets as defined in IAS 32 . (f) goodwill acquired in a business combination - IFRS 3 Business Combinations (g) deferred acquisition costs, and intangible assets, arising from an insurer’s contractual rights under insurance contracts within the scope of IFRS 4 Insurance Contracts . (h) non-current intangible assets classified as held for sale IFRS 5 Non-current Assets Held for Sale and Discontinued Operations . (i) assets from contracts with customers - IFRS 15 Revenue from Contracts with Customers . 2 True or False: Intangible assets may be contained in or in a physical substance. These intangible assets are treated under IAS 16 Property Plant and Equipment. Answer: False. Examples of these assets are computer software contained in compact disk, licenses and patents embodied in legal documentation. Management uses judgment to assess which is more significant: the intangible or tangible elements. (par 4) 3 Power Co. has a computer software for a machine tool that cannot operate without that software. How is this classified in the financial statements of the company? PPE. General rule: an entity should apply judgment for intangible assets that may have intangible and tangible elements. If the intangible asset may be is an integral part of the related hardware, it is treated as PPE. (par.4) 4 IAS 38 or IFRS 16? Rights held by lessee under licensing agreement Answer: IAS 38 Examples: motion picture films, video recordings, plays, manuscripts, patents and copyrights. (par 6) 5 Identify: a. Systematic allocation of the depreciable amount of an intangible asset over its useful life.
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