Accounting Standards and Governance: Intangible Assets and

School: Western Sydney University - Course: BUS 200974 - Subject: Accounting

Portfolio 3ACCT3003 Accounting Standards and Governance20181316 Chapter 8 3. Explain the difference in how you measure intangible assets that are individually acquired compared with those that are acquired as part of a business combination. An intangible asset can be recognised when it can be seen to be probable that the asset's future economic benefits will go directly to the entity and the cost of the asset is able to be reliably measured. The costs of a separately acquired intangible asset should include the costs associated with acquiring the asset and preparing the asset for its use. This cost comprises of its purchase price and any other directly attributable cost from preparing the asset. If an intangible asset is acquired in a business combination, then its cost is its fair value at the set acquisition date. The expectations the market participants have about the probability that future economic benefits will flow to the entity will result in the asset's fair value. 15. Determine how the above expenditure would be treated for accounting purposes. The 3 research expenses (a,b) will be expensed as they occur, as is typical for research expenditure. However, the testing of the fin and development of the prototype (c/d), can be deferred to future periods and disclosed as an intangible asset, as is typical for development expenditure. 23. a. Prepare the journal entry to account for any impairment of goodwill. Goodwill - Bo LtdNet Identifiable AssetsTotal Carrying amount1,2005,8007,000 Recoverable amount6,200 Impairment loss800 DateAccount title & explanationDebit ($)Credit ($) 30 June 2023Impairment loss - goodwill800 Accumulated impairment loss - goodwill800 (To recognise impairment loss of goodwill) b. Assume instead that at the end of the reporting period the management of Mam Ltd determines that the recoverable amount of the cash-generating unit, which is considered to be Mam Ltd, totals $4 800 000. Prepare the journal entry to account for the impairment. Impairment loss = Carrying amount - Recoverable amount 2,200 = 7,000 - 4,800 Impairment loss •Goodwill: 1,200 •NIA: 1,000 Thus, divide NIA loss among identifiable assets (x1000/6000) DateAccount title & explanationDebit ($)Credit ($) 30 June 2023Impairment loss - goodwill1,200 Accumulated impairment loss - goodwill1,200 1

Portfolio 3ACCT3003 Accounting Standards and Governance20181316 (To recognise impairment loss of goodwill) 30 June 2023Impairment loss - identifiable assets1,000 Accumulated impairment loss - customer list8.33 (1/6) Accumulated impairment loss - machinery241.67 (1/6) Accumulated impairment loss - buildings250 (1/6) Accumulated impairment loss - land500 (1/6) (To recognise impairment losses on assets)