1. an intangible asset should be amortised and written off on a systematic basis over the asset’s economic life
2. internally generated goodwill may be carried in the statement of financial position if the value can be determined with reasonable certainty
3. internally generated brands can never be recognised as intangible assets
Which of the following is consistent with IAS 38 Intangible assets?
A1 and 2 only
B1 and 3 only
D 3 only
Q2 During 20x7, Research Ltd incurred the following expenditure on research and development activities, none of which related to the cost of non-current assets. 1 £20,000 on investigating methods of separating raw materials into Chemicals A, B and C. 2 After the technical viability of converting chemical B into a new medicine for sensitive teeth had been proved, £150,000 on the conversion process.
Commercial production and sales of the medicine commenced on 1 April 20X7 and are expected to produce steady profitable income over a 10-year period before being replaced. Adequate resources exist to achieve this. No commercial uses have been discovered for chemicals A and C. What is the maximum amount of development expenditure that can be carried forward at 31 December 20X8 in accordance with IAS 38 Intangible assets?
Q3Which of the following should be included in a company’s statement of financial position as an intangible non-current asset under IAS 38?
Apayments on account of patents
Bexpenditure on completed research
Cbrands developed by the company
Q4Henna plc was incorporated on 1st January 20X6. At 31 December 20X6 the following items had arisen. 1purchase of laboratory equipment for research purposes£80,000 2goodwill purchase for valuable consideration£100,000
3goodwill created by the company£80,000
5costs incurred in developing brands£60,000
Prior to amortisation, what amount should be carried as intangible assetys in the statement of financial position of the company at 31 December 20X6 in accordance with IAS 38 Intangible assets?
Q5In accordance with IAS 38 Intangible assets, which of the following conditions would preclude any part of the development expenditure to which it relates being capitalised?
Athe development is incomplete
Bthe benefits flowing from the completed development are expected to be greater than its costs
Cfunds are unlikely to be available to complete its development
Dthe development is expected to give rise to more than one product Q6In accordance with IAS 38 Intangible assets, which of the following types of expenditure must be recognised as an expense in the year in which incurred?
Atangible assets acquired in order to provide facilities foe research and development activities
B legal costs in connection with the registration of a patent
Ccosts of searching for possible alternative products
Dsalaries of personnel solely engaged in finalising a new product Q7Which of the following statements relating to internally generated intangibles are true in accordance with IAS 38 Intangibles assets? 1 expenditure on training staff to operate the assets should not be capitalised 2 salaries of personnel directly engaged in generating the assets should be capitalised 3 internally generated customer lists should not be capitalised 4 costs of evaluating alternatives for new materials should be capitalised
A3 and 4 only
B2 and 3 only
C1 and 4 only
D1, 2 and 3 only
Metro plc is a company operating in media and communications. It owns a number of newspapers and monthly magazine titles, which were acquired when the company acquired the assets of News Media. The consideration totalled £130m of which £100m was attributed to identifiable net...