唐納德中級會計答案

CHAPTER12

IntangibleAssets

ASSIGNMENTCLASSIFICATIONTABLE(BYTOPIC)

BriefConcepts

TopicsQuestionsExercisesExercisesProblemsforAnalysis

123

1.Intangibleassets;1,2,3,4,5,6,

concepts,definitions;7,8,9,10,11,

itemscomprising12,13,14,26,

intangibleassets.27,29

L23412312

2.Patents;franchise;9,10,13,14,‘,6

乙12-734

organizationcosts;25,27,29‘

tradename.

6856

3.Goodwill.12,13,14,18‘

5,乙

86

4.Impairmentof15,16,17,

intangibles.18,26,29

12345

5.Researchand19,20,21,

developmentcosts22,23,24

andsimilarcosts.

4

*6.Computersoftware30,31,32

costs.

*ThismaterialiscoveredinanAppendixtothechapter.

ASSIGNMENTCLASSIFICATIONTABLE(BYLEARNINGOBJECTIVE)

Brief

LearningObjectivesExercisesExercisesProblems

1.Describethecharacteristicsofintangibleassets.1.2,3

2.Identifythecoststoincludeintheinitialvaluation1,2,3,5,7,9,1,2,3,6

ofintangibleassets.4,510,11

3.Explaintheprocedureforamortizingintangible1,2,3,4,4,5,6,7,9,1,2,3,6

assets.12,1310,11,13

4.Describethetypesofintangibleassets.1,2,3

5.Explaintheconceptualissuesrelatedtogoodwill.12,13

6.Describetheaccountingproceduresforrecording512,13,155,6

goodwill.

7.Explaintheaccountingissuesrelatedtointangible-6,7,8,914,155,6

assetimpairments.

8.Identifytheconceptualissuesrelatedtoresearch5,9

anddevelopmentcosts.

9.Describetheaccountingforresearchand9,10,11,126,8,16,174

developmentandsimilarcosts.

10.Indicatethepresentationofintangibleassets134,6

andrelateditems.

*11.Understandtheaccountingtreatmentforcomputer1418,19

softwarecosts.

*ThismaterialiscoveredinanAppendixtothechapter.

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ASSIGNMENTCHARACTERISTICSTABLE

LevelofTime

ItemDescriptionDifficulty(minutes)

E12-1Classificationissues-intangibles.Moderate15-20

E12-2Classificationissues-intangibles.Simple10-15

E12-3Classificationissues-intangibleasset.Moderate10-15

E12-4Intangibleamortization.Moderate15-20

E12-5Correctintangibleassetaccount.Moderate15-20

E12-6Recordingandamortizationofintangibles.Simple15-20

E12-7Accountingfortradename.Simple10-15

E12-8Accountingfororganizationcosts.Simple10-15

E12-9Accountingforpatents,franchises,andR&D.Moderate15-20

E12-10Accountingforpatents.Moderate20-25

E12-11Accountingforpatents.Moderate15-20

E12-12Accountingforgoodwill.Moderate20-25

E12-13Accountingforgoodwill.Simple10-15

E12-14Copyrightimpairment.Simple15-20

E12-15Goodwillimpairment.Simple15-20

E12-16AccountingforR&Dcosts.Moderate15-20

E12-17AccountingforR&Dcosts.Moderate10-15

*E12-18Accountingforcomputersoftwarecosts.Moderate10-15

*E12-19Accountingforcomputersoftwarecosts.Moderate15-20

P12-1Correctintangibleassetaccount.Moderate15-20

P12-2Accountingforpatents.Moderate20-30

P12-3Accountingforfranchise,patents,andtradename.Moderate20-30

P12-4AccountingforR&Dcosts.Moderate15-20

P12-5Goodwill,impairment.Complex25-30

P12-6Comprehensiveintangibleassets.Moderate30-35

CA12-1Accountingforpollutionexpenditure.Moderate25-30

CA12-2Accountingforpre-openingcosts.Moderate20-25

CA12-3Accountingforpatents.Moderate25-30

CA12-4Accountingforresearchanddevelopmentcosts.Moderate25-30

CA12-5Accountingforresearchanddevelopmentcosts.Moderate20-25

ANSWERSTOQUESTIONS

1.Thetwomaincharacteristicsofintangibleassetsare:

(a)theylackphysicalsubstance.

(b)theyarenotafinancialinstrument.

2.Ifintangiblesareacquiredforstock,thecostoftheintangibleisthefairvalueoftheconsideration

givenorthefairvalueoftheconsiderationreceived,whicheverismoreclearlyevident.

3.Limited-lifeintangiblesshouldbeamortizedbysystematicchargestoexpenseovertheirusefullife.An

intangibleassetwithanindefinitelifeisnotamortized.

4.Whenintangiblesarecreatedinternally,itisoftendifficulttodeterminethevalidityofanyfuture

servicepotential.Topermitdeferralofthesetypesofcostswouldleadtoagreatdealofsubject-tivity

becausemanagementcouldarguethatalmostanyexpensecouldbecapitalizedonthebasisthatit

willincreasefuturebenefits.Thecostofpurchasedintangibles,however,iscapitalizedbecauseits

costcanbeobjectivelyverifiedandreflectsitsfairvalueatthedateofacquisition.

5.Companiescannotcapitalizeself-developed,self-maintained,orself-createdgoodwill.Theseexpen-

ditureswouldmostlikelybereportedassellingexpenses.

6.Factorstobeconsideredindeterminingusefullifeare:

(a)Theexpecteduseoftheassetbytheentity.

(b)Theexpectedusefullifeofanotherassetoragroupofassetstowhichtheusefullifeofthe

intangibleassetmayrelate.

(c)Anylegal,regulatory,orcontractualprovisionsthatmaylimitusefullife.

(d)Anylegal,regulatoryorcontractualprovisionsthatenablerenewalorextensionoftheasset's

legalorcontractuallifewithoutsubstantialcost.

(e)Theeffectsofobsolescence,demand,competition,andothereconomicfactors.

(f)Thelevelofmaintenanceexpenditurerequiredtoobtaintheexpectedfuturecashflowsfromthe

asset.

7.Theamountofamortizationexpensedforalimited-lifeintangibleassetshouldreflectthepatternin

whichtheassetisconsumedorusedup,ifthatpatterncanbereliablydetermined.Ifthepatternof

productionorconsumptioncannotbedetermined,thestraight-linemethodofamortizationshouldbe

used.

8.Thistrademarkisanindefinitelifeintangibleand,therefore,shouldnotbeamortized.

9.The$190,000shouldbeexpensedasresearchanddevelopmentexpensein2010.The$91,000is

expensedassellingandpromotionexpensein2010.The$45,000ofcoststolegallyobtainthepatent

shouldbecapitalizedandamortizedovertheusefulorlegallifeofthepatent,whicheverisshorter.

10.PatentAmortizationExpense..............................................................35,000

Patents(orAccumulatedPatentAmortization)...........................35,000

Straight-lineamortizationisusedbecausethepatternofusecannotbereliablydetermined.

11.Artistic-relatedintangibleassetsinvolveownershiprightstoplays,pictures,photographs,andvideo

andaudiovisualmaterial.Theseownershiprightsareprotectedbycopyrights.Contractrelated

intangibleassetsrepresentthevalueofrightsthatarisefromcontractualarrangements.Examplesare

franchiseandlicensingagreements,constructionpermits,broadcastrights,andserviceorsupply

contracts.

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QuestionsChapter12(Continued)

12.Varyingapproachesareusedtodefinegoodwill.Theyare

(a)Goodwillshouldbemeasuredinitiallyastheexcessofthefairvalueoftheacquisitioncostover

thefairvalueofthenetassetsacquired.Thisdefinitionisameasurementdefinitionbutdoesnot

conceptuallydefinegoodwill.

(b)Goodwillissometimesdefinedasoneormoreunidentifiedintangibleassetsandidentifiable

intangibleassetsthatarenotreliablymeasurable.Examplesofelementsofgoodwillincludenew

channelsofdistribution,synergiesofcombiningsalesforces,andasuperiormanagementteam.

(c)Goodwillmayalsobedefinedastheintrinsicvaluethatabusinesshasacquiredbeyondthemere

valueofitsnetassetswhetherduetothepersonalityofthoseconductingit,thenatureofits

location,itsreputation,oranyothercircumstanceincidentaltothebusinessandtendingtomake

itpermanent.Anotherdefinitionisthecapitalizedvalueoftheexcessofestimatedfutureprofitsof

abusinessovertherateofreturnoncapitalconsiderednormalintheindustry.

Negativegoodwilldevelopswhenthefairvalueoftheassetspurchasedishigherthanthecost.This

situationmaydevelopfromamarketimperfection.Inthiscase,thesellerwouldhavebeenbetteroffto

selltheassetsindividuallythanintotal.However,situationsdooccur(e.g.,aforcedliquidationor

distressedsaleduetothedeathofthecompanyfounder),inwhichthepurchasepriceislessthanthe

valueoftheidentifiablenetassets.

13.Goodwillisrecordedonlywhenitisacquiredbypurchase.Goodwillacquiredinabusiness

combinationisconsideredtohaveanindefinitelifeandthereforeshouldnotbeamortized,butshould

betestedforimpairmentonatleastanannualbasis.

14.Manyanalystsbelievethatthevalueofgoodwillissosubjectivethatitshouldnotbegiventhesame

statusasothertypesofassetssuchascash,receivables,inventory,etc.Theanalystsaresimply

statingthattheybelievethatpresentationofgoodw川onthebalancesheetdoesnotprovideany

usefulinformationtotheusersoffinancialstatements.Whetherthisistrueornotisadifficultpointto

prove,butitshouldbenotedthatitappearscontradictorytopayforthegoodwillandthenimmediately

writeitoff,denyingthatithasanyvalue.

15.Accountingstandardsrequirethatifeventsorchangesincircumstancesindicatethatthecarrying

amountofsuchassetsmaynotberecoverable,thenthecarryingamountoftheassetshouldbe

assessed.Theassessmentorreviewtakestheformofarecoverabilitytestthatcomparesthesumof

theexpectedfuturecashflowsfromtheasset(undiscounted)tothecarryingamount.Ifthecashflows

arelessthanthecarryingamount,theassethasbeenimpaired.Theimpairmentlossismeasuredas

theamountbywhichthecarryingamountexceedsthefairvalueoftheasset.Thefairvalueofassets

ismeasuredbytheirfairvalueifanactivemarketforthemexists.Ifnomarketpriceisavailable,the

presentvalueoftheexpectedfuturenetcashflowsfromtheassetmaybeused.

16.UnderU.S.GAAP,impairmentlossesonassetsheldforusemaynotberestored.

17.Impairmentlossesarereportedaspartofincomefromcontinuingoperations,generallyinthe“Other

expensesandlosses"section.Impairmentlosses(andrecoveryoflossesforassetstobedisposedof)

aresimilartoothercoststhatwouldflowthroughoperations.Thus,gains(recoveriesoflosses)on

assetstobedisposedofshouldbereportedaspartofincomefromcontinuingoperations.

18.Theamountofgoodwillimpairedis$40,000,computedasfollows:

Recordedgoodwill...................................................$400,000

Impliedgoodwill.......................................................360,000

Impairedgoodwill.....................................................$40.000

QuestionsChapter12(Continued)

19.Researchanddevelopmentcostsareincurredtodevelopnewproductsorprocesses,toimprove

presentproducts,ortodiscovernewknowledge.R&Dexpenditurespresentproblemsof(1)identifying

thecostsassociatedwithparticularactivities,projects,orachievements,and(2)determiningthe

magnitudeofthefuturebenefitsandthelengthoftimeoverwhichsuchbenefitsmayberealized.R&D

activitiesmayincurcostsclassifiedasfollows:

(a)materials,equipment,andfacilities,

(b)personnel,

(c)purchasedintangibles,

(d)contractservices,and

(e)indirectcosts.

20.(a)Personnel(labor)typecostsincurredinR&Dactivitiesshouldbeexpensedasincurred.

(b)Materialsandequipmentcostsshouldbeexpensedimmediatelyunlesstheitemshavealternative

futureuses.Iftheitemshavealternativefutureuses,thematerialsshouldberecordedas

inventoriesandallocatedasconsumedandtheequipmentshouldbecapitalizedanddepreciated

asused.

(c)IndirectcostsofR&DactivitiesshouldbereasonablyallocatedtoR&D(exceptforgeneraland

administrativecosts,whichmustbeclearlyrelatedtobeincluded)andexpensed.

21.SeeIllustration12-14.

_____________TypeofExpenditure__________AccountinaTreatment

1.Constructionoflong-rangeresearchfacilityCapitalizeanddepreciateasR&Dexpense

foruseincurrentandfutureprojects(three-

story,400,000-square-footbuilding).

2.AcquisitionofR&DequipmentforuseonExpenseimmediatelyasR&D.

currentprojectonly.

3.AcquisitionofmachineryforuseoncurrentCapitalizeanddepreciateasR&Dexpense.

andfutureR&Dprojects.

4.PurchaseofmaterialsforuseoncurrentInventoryandallocatetoR&Dprojects;

andfutureR&Dprojects.expenseasconsumed.

5.SalariesofresearchstaffdesigningnewExpenseimmediatelyasR&D.

laserbonescanner.

6.ResearchcostsincurredundercontractwithRecordasareceivable(reimbursable

NewHorizon,Inc.,andbillablemonthly.expenses).

7.Material,labor,andoverheadcostsofExpenseimmediatelyasR&D.

prototypelaserscanner.

8.CostsoftestingprototypeanddesignExpenseimmediatelyasR&D.

modifications.

9.LegalfeestoobtainpatentonnewlaserCapitalizeaspatentandamortizeto

scanner.overheadaspartofcostofgoods

manufactured.

10.Executivesalaries.Expenseasoperatingexpense(general

andadministrative).

11.CostofmarketingresearchtopromotenewExpenseasoperatingexpense(selling).

laserscanner.

12.EngineeringcostsincurredtoadvancetheExpenseimmediatelyasR&D.

laserscannertofullproductionstage.

13.CostsofsuccessfullydefendingpatentonCapitalizeaspatentandamortizetoover-

laserscanner.headaspartofcostofgoodsmanufactured.

14.CommissionstosalesstaffmarketingnewExpenseasoperatingexpense(selling).

laserscanner.

(a)ExpenseasR&D.

(b)ExpenseasR&D.

(c)Capitalizeaspatentand/orlicenseandamortize.

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QuestionsChapter12(Continued)

22.Eachoftheseitemsshouldbechargedtocurrentoperations.Advertisingcostshavesomeminor

exceptionstothisgeneralrule.However,thespecificaccountingisbeyondthescopeofthistextbook.

23.$585,000($400,000+$60,000+$125,000).

24.Thesecostsarereferredtoasstart-upcosts,ormorespecificallyorganizationalcostsinthiscase.

Theaccountingforstartupcostsisstraightforward—expensethesecostsasincurred.Theprofession

recognizesthatthesecostsareincurredwiththeexpectationthatfuturerevenueswilloccuror

increasedefficienciesw川result.However,todeterminetheamountandtimingoffuturebenefitsisso

difficultthataconservativeapproach—expensingthesecostsasincurred——isrequired.

25.Thetotallife,perrevisedfacts,is40years(10+30).Thereare30(40-10)remainingyearsfor

$540,000

amortizationpurposes.Originalamortization:-------------=$18,000peryear;$18,000X10years

30

expired=$180,000accumulatedamortization.

$540,000originalcost

-180,000accumulatedamortization

$360,000remainingcosttoamortize

$360,000+30years=$12,000amortizationfor2010andyearsthereafter.

26.iGAAPrelatedtointangibleassetsispresentedinIAS38,"IntangibleAssets.iGAAPrelatedto

impairmentsisfoundinIAS36,impairmentofAssets”.

27.Similaritiesinclude(1)inU.S.GAAPandiGAAP,thecostsassociatedwithresearchand

developmentaresegregatedintothetwocomponents;(2)iGAAPandU.S.GAAParesimilarfor

intangiblesacquiredinabusinesscombination.Thatis,anintangibleassetisrecognizedseparately

fromgoodwillifitrepresentscontractualorlegalrightsoriscapableofbeingseparatedordividedand

sold,transferred,licensed,rentedorexchanged;(3)UnderbothGAAPs,limitedlifeintangiblesare

subjecttoamortization,butgoodwillandindefinitelifeintangiblesarenotamortized;rathertheyare

assessedforimpairmentonanannualbasis;(4)iGAAPandU.S.GAAParesimilarintheaccounting

forimpairmentsofassetsheldfordisposal.

Notabledifferencesare:(1)whilecostsintheresearchphasearealwaysexpensedunderboth

iGAAPandU.S.GAAP,underiGAAPcostsinthedevelopmentphasearecapitalizedonce

technologicalfeasibilityisachieved;(2)iGAAPpermitssomecapitalizationofinternallygenerated

intangibleassets(e.g.,brandvalue),ifitisprobabletherewillbeafuturebenefitandtheamountcan

bereliablymeasured.U.S.GAAPrequiresexpensingofallcostsassociatedwithinternallygenerated

intangibles;(3)iGAAPrequiresanimpairmenttestateachreportingdateforlong-livedassetsand

intangiblesandrecordsanimpairmentiftheassetscarryingamountexceedsitsrecoverableamount;

therecoverableamountisthehigheroftheasset'sfairvaluelesscoststosellanditsvalueinuse.

Valueinuseisthefuturecashflowstobederivedfromtheparticularasset,discountedtopresent

value.UnderU.S.GAAP,impairmentlossismeasuredastheexcessofthecarryingamountoverthe

asset'sfairvalue;(4)iGAAPallowsreversalofimpairmentlosseswhentherehasbeenachangein

economicconditionsorintheexpecteduseoftheasset.UnderU.S.GAAP,impairmentlossescannot

bereversedforassetstobeheldandused;theimpairmentlossresultsinanewcostbasisforthe

asset;(5)underiGAAP,acquiredin-processresearchanddevelopment(IPR&D)isrecognizedasa

separateintangibleassetifitmeetsthedefinitionofanintangibleassetanditsfairvaluecanbe

measuredreliably.U.S.requiresacquiredIPR&Dtobewrittenoff.

QuestionsChapter12(Continued)

28.Asshownintheanalysisbelow,underiGAAP,Sophia'sROAisoverstatedcomparedtoaU.S.GAAP

company.

iGAAPU.S.GAAP

IncomeU1,125U920*

Assets12,50012,295**

ROA(Income+Assets)9%7.5%

*(U1,125+U120-U325)

*"(U12,500+U120-L825)

29.TheIASBandFASBhaveidentifiedaprojectrelatingtotheaccountingforresearchanddevelopment

thatcouldpossiblyconvergeiGAAPandU.S.GAAPontheissueofin-processR&D,Onepossibilityis

toamendU.S.GAAPtoallowcapitalizationofin-processR&DsimilartotheprovisionsiniGAAP.A

secondproject,inaverypreliminarystage,wouldconsiderexpandedrecognitionofinternally

generatedintangibleassets.Asindicated,iGAAPpermitsmorerecognitionofintangiblescomparedto

U.S.GAAP.Thus,itwillbechallengingtodevelopconvergedstandardsforintangibleassets,given

thelong-standingprohibitiononcapitalizingintangibleassetsandresearchanddevelopmentinU.S.

GAAP.LearnmoreaboutthetimelinefortheintangibleassetprojectattheIASBweb-site:

/Current+Projects/IASB+Work+Plan.htm

*30.Theprofession'spositionisthatcostsincurredinternallyincreatingacomputersoftwareproducttobe

soldshouldbechargedtoexpensewhenincurredasresearchanddevelopmentuntiltechnological

feasibilityhasbeenestablishedfortheproduct.Technologicalfeasibilityisestablishedupon

completionofadetailedprogramdesignor,initsabsence,completionofaworkingmodel.Thereafter,

allsoftwarecostsshouldbecapitalizedandsubsequentlyreportedatthelowerofunamortizedcostor

netrealizablevalue.Capitalizedcostsareamortizedbasedoncurrentandfuturerevenueforeach

productwithanannualminimumequaltostraight-lineamortizationovertheremainingestimated

economiclifeoftheproduct.

($2,000,000、

*31.Underthepercentofrevenueapproach,$900,000$4,500,000X---------------------------------wouldbe

V$2,000,000+$8,000,000?

reported;underthestraight-lineapproach,$1,125,000wouldbereported.Becausethestraight-line

approachishigher,$1,125,000shouldbereportedasR&Dexpenseforthisproduct.

*32.Expensingthedevelopmentcostinthecurrentyearisappropriatewhenthecostsareclassifiedas

researchanddevelopmentcostsandthecomputersoftwareistobesold,leased,ormarketedtothird

parties.

Capitalizingthedevelopmentcostofthesoftwarepackageoveritsestimatedusefullifeisappropriate

ifthecostsaresubsequenttoachievingtechnologicalfeasibilityandfuturebenefitsarereasonably

certain.

Stakeholders(usersoffinancialstatementsorpartiesaffectedbyfinancialstatements)maybe

harmedwheneverexpensesandrevenuesaremismatched.Inappropriaterecognitionofdevelopment

costscanharmallpartiesinvolvedduetoanyunderstatementandoverstatementofincome.

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SOLUTIONSTOBRIEFEXERCISES

BRIEFEXERCISE12-1

Patents...........................................................................54,000

Cash......................................................................54,000

PatentAmortizationExpense....................................5,400

Patents($54,000X1/10=$5,400)....................5,400

BRIEFEXERCISE12-2

Patents...........................................................................24,000

Cash......................................................................24,000

PatentAmortizationExpense....................................8,400

Patents[($43,200+$24,000)X1/8=$8,400]…“8,400

BRIEFEXERCISE12-3

TradeName....................................................................68,000

Cash................