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Lecture 11

RSM220H1 Lecture Notes - Lecture 11: Deferral, Income Statement, Intangible AssetPremium

2 pages72 viewsSpring 2018

Department
Rotman Commerce
Course Code
RSM220H1
Professor
Amy Kwan
Lecture
11

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Characteristics
Intangible
Only recognized when business is acquired
Only sold when business is sold
Cannot be sold separately
Asset representing future economic benefits arising from other assets required in business
combination that are not individually identified and separately recognized
If 100% of business is acquired, all identifiable net assets are recognized at fair value on
acquisition date
Calculation of goodwill:
Goodwill
Results from contractual other legal rights
Can be separated from entity, sold/transferred/licensed/exchanged/rented either by
itself or in combination with another contract, identifiable asset, or liability
Is separable
Intangible assets are identifiable
1.
Intangible assets lack physical substance
2.
Intangible assets are nonmonetary
3.
Intangibles
Intangibles
Recognition and measurement
Measured at cost
Probable future economic benefits
i.
Cost reliably measured
ii.
Recognition criteria:
Acquisition cost and expenditures to ready for intended use
Measured at cost
Use fair value of shares
ASPE allows for either fair value of asset or shares
If acquired for shares, cost is asset's fair value unless value cannot be measured reliably
Fair value of item given up/intangible received if non-monetary exchange
Purchased intangibles
When several intangibles are bought together, cost is allocated to each intangible based
on relative fair value
Intangibles that are not identifiable assets are goodwill
Intangibles purchased in business combination
Prepaid expenses are recognized as assets until expensed when right to receive
good/service no longer exists
Entity has paid for goods before delivery
Entity has paid for services before receiving/using services
Can be recognized if:
Prepayments
At acquisition
Generating intangible asset broken down into research and development phases
If uncertainty about which phase an activity relates to, is classified as research
Research phase costs are expensed when incurred
Technical feasibility of completing intangible asset
i.
Intention to complete for use or sale
ii.
Ability to use or sell
iii.
Availability of technical, financial, and other resources needed to complete, use, and sell
iv.
Existence of market if sold, usefulness to entity if internal used
Future economic benefits
v.
Ability to reliably measure costs associated with and attributed to intangible asset during
vi.
Criteria of development phase:
Internally developed intangible assets
Week 11: Intangible Assets
April 2, 2018
RSM220 Page 1
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