[BUS 320] - Final Exam Guide - Comprehensive Notes for the exam (95 pages long!)

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Published on 29 Nov 2016
School
Simon Fraser University
Department
Business Administration
Course
BUS 320
SFU
BUS 320
FINAL EXAM
STUDY GUIDE
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Lecture Number
Date
Topic Readings (1)
12
July 28
Intangibles Ch 12
IAS 23, 36, 38
IFRS 3
Chapter 12: Intangible Assets and Good will
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[Type the document title]
Week 12: Chapter 12 BUS 320- Intermediate Accounting: Asset
1- Definition, Recognition and Measurement
1-1. Characteristics
Intangible assets must meet all of the following characteristics:
1. They are identifiable, having at least one of the following characteristics:
i) Results from contractual or legal rights, or
ii) Can be separated from the entity and sold, rented, exchanged, transferred or licensed
2. They lack physical substance, and
3. They are non-monetary
Identifiable intangibles with similar characteristics should be grouped and reported together
1-2. Recognition and measurement at acquisition
Intangible assets initially recorded at cost. They can be recognized if:
Probable future economic benefit, and
Asset can be measured reliably
In tangible assets may be 1) purchased, 2) acquired as part of a business combination, o2 3)
developed internally.
Purchased:
Cost includes all expenditures that are necessary to get the intangible asset ready for its
intended use (e.g., purchase price, legal fees)
Interest on intangible assets: If there are delayed payment terms, recognize financing
expense (interest)
Acquired for shares: If acquired for shares, cost is generally measured at asset’s fair value
(or value of shares if value of asset cannot be determined)
Exchanged for non monetary assets: If intangible assets are exchanged for non-monetary
assets, the fair value of the item given up or the fair value of the intangible received is used
to determine cost
Basket Purchase: For a “basket purchase” of intangibles, the cost is allocated based on fair
values.
Prepaid asset: can be recognized only when an entity has paid for:
Goods before delivery (or other access rights), or
Services before receiving/using those services.
Prepaid assets represent the right to receive goods/services, and no longer exist once those
goods/services are received (asset is de-recognized)
Acquired as part of a business combination,
Business combination: when one business acquires control over one or more other businesses.
The iidentifiable intangible assets acquired are recognized at fair value
Developed internally
Costs that a company incurs internally to create intangibles (such as patents and brand names)
Internally developed intangibles present significant challenges for recognition and
measurement:
1. Recognition: When to recognize? Is there probability of future cash flows?
2. Measurement: What costs to capitalize vs. expense? How to reliably measure the costs?
Comparing IFRS and ASPE
IFRS requires that costs be capitalized when certain criteria are met, and expense all other
costs
2
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Document Summary

Identifiable intangibles with similar characteristics should be grouped and reported together. Cost includes all expenditures that are necessary to get the intangible asset ready for its intended use (e. g. , purchase price, legal fees) Interest on intangible assets: if there are delayed payment terms, recognize financing expense (interest) Acquired for shares: if acquired for shares, cost is generally measured at asset"s fair value (or value of shares if value of asset cannot be determined) Exchanged for non monetary assets: if intangible assets are exchanged for non-monetary assets, the fair value of the item given up or the fair value of the intangible received is used to determine cost. Basket purchase: for a basket purchase of intangibles, the cost is allocated based on fair values. Prepaid asset: can be recognized only when an entity has paid for: Goods before delivery (or other access rights), or.

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