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Chapter 12: Q11FRS (page 656)

Question: Where can authoritative IFRS guidance related to intangible assets be found?

Short Answer

Expert verified

Answer

IAS 38 and IAS 36.

Step by step solution

01

Meaning of IFRS                                                                                                    

IFRS refers to a collection of globally agreed accounting and financial reporting rules for the preparation and presentation of financial statements. Ensures that accounting practices are consistent, resulting in comparable financial records among various reporting substances around the world.

02

Explaining the authoritative IFRS guidance related to intangible assets           

IAS 38, "Intangible Assets," contains IFRS guidance for intangible assets. IAS 36, "Impairment of Assets," is an IFRS that deals with impairments.

"International Financial Reporting Standard No: 16, IASB" is the authorized advice for accounting for leases under International Financial Reporting Standards (IFRS) in the 'leases' category.

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Most popular questions from this chapter

Explain the difference between artistic-related intangible assets and contract-related intangible assets.

Question: On September 1, 2017, Winans Corporation acquired Aumont Enterprises for a cash payment of \(700,000. At the time of purchase, Aumont’s balance sheet showed assets of \)620,000, liabilities of \(200,000, and owners’ equity of \)420,000. The fair value of Aumont’s assets is estimated to be $800,000. Compute the amount of goodwill acquired by Winans.

Briefly discuss how a transfer of securities from the available-for-sale category to the trading category affects stockholders’ equity and income.

Question: Why are held-to-maturity investments applicable only to debt securities?

Question: (Accounting for Franchise, Patents, and Trademark) Information concerning Sandro Corporation’s intangible assets is as follows.

  1. On January 1, 2017, Sandro signed an agreement to operate as a franchisee of Hsian Copy Service, Inc. for an initial franchise fee of \(75,000. Of this amount, \)15,000 was paid when the agreement was signed, and the balance is payable in 4 annual payments of \(15,000 each, beginning January 1, 2018. The agreement provides that the down payment is not refundable and no future services are required of the franchisor. The present value at January 1, 2017, of the 4 annual payments discounted at 14% (the implicit rate for a loan of this type) is \)43,700. The agreement also provides that 5% of the revenue from the franchise must be paid to the franchisor annually. Sandro’s revenue from the franchise for 2017 was \(900,000. Sandro estimates the useful life of the franchise to be 10 years. (Hint: You may want to refer to Chapter 18 to determine the proper accounting treatment for the franchise fee and payments.)
  2. Sandro incurred \)65,000 of experimental and development costs in its laboratory to develop a patent that was granted on January 2, 2017. Legal fees and other costs associated with registration of the patent totaled \(17,600. Sandro estimates that the useful life of the patent will be 8 years.
  3. A trademark was purchased from Shanghai Company for \)36,000 on July 1, 2014. Expenditures for successful litigation in defense of the trademark totaling $10,200 were paid on July 1, 2017. Sandro estimates that the useful life of the trademark will be 20 years from the date of acquisition.

Instructions

  1. Prepare a schedule showing the intangible assets section of Sandro’s balance sheet at December 31, 2017. Show supporting computations in good form.

Prepare a schedule showing all expenses resulting from the transactions that would appear on Sandro’s income statement for the year ended December 31, 2017. Show supporting computations in good form.

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