A formal budgeting process tied to the acquisition of long-lived assets is a management activity, but is not a control over long-lived assets. c. Either I or II answer choices. By clicking Accept, you consent to the use of all the cookies. For example, a big brand name alone can help a company sell far more than a company with little brand recognition. However, this approach means that the value factor captures not only the assets-in-place but also the profitability of these assets. When determining the net assets, the acquirer will look at both tangible and intangible assets (excluding goodwill) less assumed liabilities. A. The idea is that companies with more assets-in-place have higher downside potential when times are tough. d. Neither I nor II. During the third quarter, the entity spent another P1,000,000 on the tablet making it ready for use and sale For growth stocks, more of the stock price is represented by future growth opportunities and, because those growth opportunities are more flexible (because the related investment has not yet been made) then a recession is less likely to have such a big impact. Second quarter 500, tangible definition: 1. real and not imaginary; able to be shown, touched, or experienced: 2. real and not imaginary. GIZMOS Student Exploration: Big Bang Theory Hubbles Law 2021, Module One Short Answer - Information Literacy, 1-1 Discussion Being Active in Your Development. a. However, others regard a value stock as one where the existing business value (book value plus PV of economic profit) divided by price is high. c. An identifiable nonmonetary asset without physicalsubstance. (vi) Fictitious Assets . d. account payable; account payable, Which of the following would appear on a multiple-step income statement but not on a single-step income statement? Which of the following is false regarding the valuation of goodwill? Based on this, a value stock is one where the book to price ratio is high relative to other stocks. b. any legal or contractual provisions that may limit the useful life. 2,050, O a. Intangible assets are depreciated over their expected lives. following, An intangible asset acquired by way of government grant may be initially recorded at Goodwill shall be recognized only when Even if these assets are capitalised, they would almost certainly be reported at cost, in which case the balance sheet amount could significantly understate the value of the intangibles and hence book to price could be artificially low. Software cost P 2,500. c. Expected usage of the asset by the entity When performing this procedure, which assertion is the auditor focusing on? What amount should be recognized as cost of the order backlog? The amount was spent after the application development stage. the period of those rights but may be shorter depending on the period over which the asset is Please read our fullterms of use and disclaimer. d. 17. Queenie Company reported the following data at year-end: Yasmin Company paid P3,500,000 to purchase intangible assets with the following fair value: Sweet Company incurred P1,600,000 of research and development costs to develop a product for which a An intangible asset is an asset that does not have any physical existence. II. d. Neither I nor I, 17 cost of a separately acquired intangible asset comprises its purchase price, including import duties and The lack of intangible asset recognition means that most investors know to use book value with caution. There are some exceptions such as development costs where, for IFRS reporters, and subject to satisfying certain criteria, capitalisation of the expenditure incurred is required. No investment advice or recommendation is given or implied. All articles and analytical models on this website are for general information and educational purposes only. Which one of the following is not an audit procedure used when testing restructuring charges? Franchise c. Patent d. Trademark; Classify copyrights as one of the following. Intangible assets are not subject to potential impairment of value because they lack physical substance. b. The entity decided to amortize the franchise over the Which of the following approaches for determining fair value of Level 3 assets is used by the auditor? b. a. An impairment loss recognized for goodwill. a. I only d. Neither I nor II. d An intangible asset is usually amortized by a credit to an income account. Completion of detailed program design 500, Long-lived assets typically represent the smallest single category of assets in many organizations. It is probable that future economic benefits attributable to the asset will flow to the entity. Which of the following statements is true concerning intangible assets? b. They are also sometimes called as capital assets or fixed capital expenditure. You will often hear investors talking about value investing or value stocks. The a. current asset b. intangible asset c. tangible asset d. investments; Cost allocation of an intangible asset is referred to as ____. Which of the following procedures could the auditor perform to test the effectiveness of controls over asset impairment? In addition to the market risk factor, the expected asset return also includes a small versus large capitalisation factor (a return premium applies to smaller capitalisation stocks) and a high versus low book to market factor (a further return premium applies to high book to market stocks). In addition, the perpetual inventory method of capitalisation means that capitalised amounts remain in perpetuity, irrespective of whether they have been impaired or are no longer used in the business. Costs to develop computer software for internal use in Dolphie's general Other testing costs after establishment of technological feasibility 300, After a natural resource such as gas or coal is used up by the client, the client is responsible for restoring the land to its original condition. These cookies will be stored in your browser only with your consent. All other things being equal, a high book to price stock would be expected to have a higher return than a low book to price stock. Panpan Company acquired a trademark relating to the introduction of a new manufacturing process. 875, Copyright 2022 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, Introduction to Psychological Research and Ethics (PSY-260), Perspectives in the Natural Sciences (SCI100), Introductory Biology: Cell And Developmental Biology (BIOMG 1350), Global Infectious Diseases and Social Justice: Lessons from Science, History, & Humanities (SCILIVSY 26), Transition To The Nursing Profession (NR-103), US history (Junior/Grade 11 - Social Studies), Financial Statement Analysis/Business Valuation (ACC345), Anatomy & Physiology I With Lab (BIOS-251), Introduction to Computer Technology (BIT-200), Managing Organizations & Leading People (C200), Preparation For Professional Nursing (NURS 211), Professional Application in Service Learning I (LDR-461), Advanced Anatomy & Physiology for Health Professions (NUR 4904), Principles Of Environmental Science (ENV 100), Operating Systems 2 (proctored course) (CS 3307), Comparative Programming Languages (CS 4402), Business Core Capstone: An Integrated Application (D083), Kami Export - Madeline Gordy - Paramecium Homeostasis, Skill Blood Admin - Active Learning Template. a. a. account receivable; account receivable 21 of the following items does not qualify as an intangible asset? c. Both I and II b. Intangible assets There is an active market for the asset and residual value determined by reference to that market c. 4,250, Which of the following controls is not a typical control that affects multiple assertions for long-lived assets? d. II and III only, II. c. 150, The entity has the option its intended use First quarter P 2,000, Determining the tax base for an asset. But opting out of some of these cookies may affect your browsing experience. O b. Intangible assets may be acquired from purchasing the rights from another company. b. What amount of expense should be reported for the first full year? The auditor would be most likely to request a schedule of repairs and maintenance expense to test the existence of long-lived assets. What is the research and development expense? P690,000 for office furniture and equipment with an estimated useful life of ten years. When testing the existence/occurrence assertion for long-lived assets, the focus is typically on disposals of assets that took place during the year. The pervasiveness of management estimates is a factor, An inherent risk associated with intangible long-lived, Some common techniques that managers may use to, A fraud scheme that WorldCom top-management, Auditors should expect clients to have written policies for, The auditor needs to understand the client's business to, When performing planning analytical procedures, the, If a client's long-lived assets involve only a few assets of, Assume a client setting where there are weak controls, When testing a control that requires training for all, Auditors who are aware of control deficiencies that could, One procedure that the auditor can use to test, When testing potential impairment of assets, the auditor, Goodwill is the excess of the purchase price over the fair, Because of conservatism considerations, auditors should. 5,236, d. The fair value of an intangible asset acquired in abusiness combination cannot be Solution: D. IAS 38 Intangible Assets outlines the accounting requirements for intangible assets, which are non-monetary assets which are without physical substance and identifiable (either being separable or arising from contractual or other legal rights). What amount should be capitalized as software cost? Both Scientific Beta and Research Affiliates estimate unrecognised intangible assets-in-place by following a perpetual-inventory approach previously used in another academic paper4See Intangible capital and the investment-q relation; Peters and Taylor. d. Net income. B. Which of the following analyses might an auditor perform as part of planning analytical procedures for long-lived assets? d. the amortization method used. An intangible asset is a useful resource without any physical presence. In our view, goodwill should not be included in shareholders equity for the purpose of price to book ratios used for identifying value stocks. It includes copyrights, goodwill, trademarks, patents, etc. Which of the following statements in relation to intangible assets acquired in a business combination is. c. Both I and II d. Neither I nor II. Which of the following statement is true about intangible In due time, both types of rewards can be appreciated by the person. Software and other computer-related assets outside of hardware also classify them as identifiable intangible assets. Should you ignore Intangible amortisation? are expensed over the specific period. The problem is that most intangibles are self-generated rather than purchased and the majority of these are not recognised in the balance sheet. The FASB has set a hierarchy of inputs to consider in assessing fair value. b. Intangible assets appear in the Current Assets section of the balance sheet. Which of the following is not an inherent risk related to long-lived asset accounts? Market-Research - A market research for Lemon Juice and Shake. How Do Bacteria Become Resistant Answer Key, Ati-rn-comprehensive-predictor-retake-2019-100-correct-ati-rn-comprehensive-predictor-retake-1 ATI RN COMPREHENSIVE PREDICTOR RETAKE 2019_100% Correct | ATI RN COMPREHENSIVE PREDICTOR RETAKE, CWV-101 T3 Consequences of the Fall Contemporary Response Worksheet 100%. The unamortized cost of the franchise was P680,000. Computer software 2,275,000. Which one of the following is not a management assertion relevant to long-lived assets? What is the carrying amount of patent on December 31, 2017? As natural resources are used up, the client has to recognize which of the following types of expense? The expected useful life of an intangible asset is generally easier to estimate than the expected useful life of a tangible noncurrent asset. maximum finite useful life? cash price equivalent. Which of the following procedures is not a fraud-related audit procedure used to respond to identified fraud risk factors? c. Intangible assets should not be recorded. 2,000, a. transferred, licensed, rented or exchanged. a. I only Factors considered in determining an intangible asset's useful life include all of the. What amount should be recorded as research and development expense? Overall, this paper makes the following three major con-tributions. Costs of conducting a business in a new location DCF and pensions: Enterprise or equity cash flow? What total amount of the costs incurred should be expensed immediately? 4,750, The entity We review their content and use your feedback to keep the quality high. Which one of the following approaches does not represent how the auditor will become aware of risks associated with long-lived assets? They are different from other kinds of assets such as equipment, machinery, and building, which we can see with our eyes. Book value might appear to be objective but deficiencies in accounting, including intangible asset accounting, may present problems (we return to intangibles below). Which of the following is true?Intangible assets are accounted for through amortization and do not use an accumulated amortization account.
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