Question bank — IAS 38 — Intangible Assets
481 questions in FR/EN/ES, scored by the real scoring engine.
Objective of the standard8 questions
- True or false? The objective of IAS 38 is to prescribe the accounting treatment for intangible assets that are not dealt with specifically in another standard.True / falseL1
- True or false? IAS 38 sets out to govern all intangible assets without exception, including those whose accounting treatment is already set specifically by another standard.True / falseL1
- True or false? The objective of IAS 38 is limited to the disclosures in the notes; the recognition and measurement of intangible assets are left to the entity's free choice.True / falseL1
- True or false? In line with its objective, IAS 38 makes the recognition of an intangible asset subject to specified conditions being met.True / falseL1
- Which of the following topics is not part of the objective of IAS 38?Single choiceL1
- Which wording best summarises the objective of IAS 38?Single choiceL1
- Arvelle holds an intangible item whose accounting treatment is prescribed specifically by a standard other than IAS 38. How does it proceed?Single choiceL1
- According to its objective, what amount does the measurement requirement of IAS 38 relate to?Single choiceL1
General scope14 questions
- A mining company incurs expenditure to evaluate the technical feasibility and commercial viability of extracting a deposit it has obtained the right to explore. It also acquires, for its head office, a licence for geological modelling software. The chief accountant wants to apply IAS 38 to both items, on the grounds that neither has physical substance. What is your answer?Single choiceL2
- True or false? A software distributor holds digital licences intended for resale in the ordinary course of its business; these licences fall under IAS 2, not IAS 38.True / falseL1
- True or false? Since a deferred tax asset has no physical substance, it falls within the scope of IAS 38.True / falseL1
- True or false? The mere fact that an intangible asset is internally developed or acquired does not determine whether it falls within the scope of IAS 38: both fall within it, unless they are covered by an exclusion.True / falseL2
- Among the following items held by Orvane, which one falls under IAS 38?Single choiceL1
- Datalys buys software activation codes from publishers and resells them to consumers; this is its ordinary business. Which standard governs these codes while they are held?Single choiceL2
- Why does IAS 38 not apply to deferred tax assets, even though they have no physical substance?Single choiceL2
- Which of the following items fall under IAS 38?Multiple choiceL1
- At the reporting date, the software publisher Kelvane holds the following items. Which ones are dealt with under a standard other than IAS 38?Multiple choiceL2
- The Nordeve group operates natural gas fields. At the reporting date, it reports expenditure on the development and extraction of a new field, predictive maintenance software acquired for its facilities and shares in a drilling company held as an investment, without control or significant influence. The management controller wants to account for all three items under IAS 38, as they lack physical substance. Which analysis do you retain?Single choiceL2Variant
- The Lumbra studio designs games and also buys game licences from other publishers to resell them to distributors, which is part of its ordinary business. At the reporting date, it holds these licences intended for resale, a deferred tax asset and a game engine licence acquired to design its own games. Which items fall under IAS 38?Single choiceL2Variant
- Alteris, which develops applications, holds three items without physical substance: a bank term deposit, rights to operate an application it developed and uses to provide its services, and a deferred tax asset. The chief financial officer concludes that only the operating rights fall under IAS 38. Which argument best supports this conclusion?Single choiceL2
- Ferrandel acquires a computer numerically controlled machining centre. The overall price includes the control software installed by the manufacturer; without this software the machine cannot perform any operation. How should Ferrandel account for the control software?Single choiceL2
- Bramvelle is equipping its new head office. It buys 40 laptops delivered with their operating system. It also acquires, from another vendor, a licence for management software that it can install on any of its servers and transfer from one machine to another; the software is supplied on a simple USB stick. Which accounting treatment is appropriate?Single choiceL2
Scope exclusions8 questions
- True or false? An equity investment falls within the scope of IAS 38 because it has no physical substance.True / falseL1
- True or false? Expenditure on the development and extraction of minerals, oil or other non-regenerative resources is excluded from the scope of IAS 38.True / falseL1
- True or false? The exploration and evaluation assets of an oil company fall under IAS 38, since they have no physical substance.True / falseL1
- Which of these exclusions from the scope of IAS 38 is correctly matched with the standard that deals with the item?Single choiceL1
- The oil company Brentano incurs several items of expenditure during the year. Which one is excluded from the scope of IAS 38?Single choiceL2
- A trainee at Corvel Bank classifies debt securities held to maturity as intangible assets, on the grounds that they lack physical substance and are held for the long term. What error does he make?Single choiceL2
- Which of the following items are among the express exclusions from the scope of IAS 38?Multiple choiceL1
- Which of the following statements about the exclusions from the scope of IAS 38 are correct?Multiple choiceL2
Definition of an intangible asset12 questions
- True or false? Under IAS 38, an asset is an intangible asset when it is not monetary, can be identified and has no physical form.True / falseL1
- An engineering consultancy has recognised the items below as intangible assets. Which one is an error?Single choiceL2
- The intangible asset register of a services company contains the following items. Which one does not meet the definition of an intangible asset?Single choiceL2
- True or false? A monetary asset, such as a bank deposit, can be an intangible asset as long as it has no physical substance.True / falseL1
- True or false? A team of highly qualified engineers, recruited at great expense by Ventelis, generally does not meet the definition of an intangible asset.True / falseL2
- Which of these features is not required by the definition of an intangible asset?Single choiceL1
- Brevane obtains from a public authority a legal right to operate a radio frequency. This right can be neither sold nor transferred to a third party. Is it identifiable within the definition of an intangible asset?Single choiceL2
- Lindor reviews four resources. Which one meets the definition of an intangible asset?Single choiceL2
- Which of the following features are part of the definition of an intangible asset?Multiple choiceL1
- The consultancy Talvio reviews the following items. Which ones can meet the definition of an intangible asset?Multiple choiceL2
- At the reporting date, Ombrel presents the items below as intangible assets. Which one is a classification error?Single choiceL2
- An analyst claims that a recipe database acquired by Gustavia is not identifiable, because Gustavia has no intention of reselling or licensing it. Where is the flaw in the reasoning?Single choiceL2
Identifiability: separable or contractual/legal rights12 questions
- True or false? An asset is identifiable only if it is both separable from the entity and arises from contractual or legal rights.True / falseL1
- True or false? An operating authorisation granted by a public authority, which the law prohibits from being transferred to a third party, can nevertheless meet the identifiability condition.True / falseL1
- True or false? A data file that the entity could rent out to third parties ceases to be separable as soon as management decides never to rent it out or sell it.True / falseL1
- Velorin holds a regional transport licence issued by the State for ten years. Regulations prohibit any transfer of this licence. On what basis is the licence identifiable?Single choiceL1
- Datalys has built a database of contact details of healthcare professionals. No legal right protects this database, but comparable databases are commonly rented to laboratories. Datalys has never rented out its own and does not plan to do so. Is the database identifiable?Single choiceL2
- Which of the following items held by the Ostrel group does not meet the identifiability condition?Single choiceL2
- Which of the following items of Rivand are identifiable?Multiple choiceL2
- Which of the following statements about the identifiability of an intangible asset are correct?Multiple choiceL2
- Norvane signs a contract with a foreign manufacturer for the exclusive distribution of its products in three countries for five years, in return for an upfront fee. The contract expressly prohibits Norvane from transferring this right to another entity, and no market would allow it to be sold. The financial controller concludes that the right is not identifiable. What should be concluded?Single choiceL2
- Fermelis has mastered a fermentation process that it has not patented. In its industry, manufacturers commonly license comparable processes to other producers. Fermelis has never granted a licence and its management wants to keep the process to itself. For the identifiability analysis only, what conclusion should be drawn?Single choiceL3
- Over the years, Mirabel has built its own customer list, which it could rent to business partners, as is common practice in its industry. The finance director argues that, since the list is identifiable, it must be recognised as an intangible asset. What conclusion should be drawn?Single choiceL3
- Kelvara separately buys two items from a competitor: a health authorisation to operate a laboratory, which regulations make non-transferable, and an unprotected file of prescribers, which Kelvara does not intend to resell but which the market would allow it to rent out. The internal auditor considers that neither item is identifiable: the authorisation because it cannot be transferred, and the file because no right protects it and Kelvara wants to keep it. Write a memo analysing the identifiability of the two items.JudgmentL3
Control of the resource13 questions
- A chain of stores has built, through costly campaigns, a loyal customer base that makes regular purchases. No contract binds these customers, who are free to go to competitors, and no exchange transactions for similar customer relationships are observed. Management wishes to recognise this customer relationship as an intangible asset. Which analysis is correct?Single choiceL3
- For an entity to control an intangible resource within the meaning of IAS 38, what must it primarily demonstrate?Single choiceL2
- Quorvel funds a six-month certification course for its maintenance technicians. The technicians remain free to resign at any time. Management believes that the skills acquired will generate lasting productivity gains. How should the cost of this training be accounted for?Single choiceL2
- Halvion employs an engineer whose expertise in acoustics is recognised across the industry. In which situation could this technical expertise meet the definition of an intangible asset?Single choiceL3
- Lunacor has regular business relationships with customers who are not bound by any contract. Which of the following can demonstrate that Lunacor controls these customer relationships?Single choiceL2
- Under IAS 38, which of the following resources do not usually give the entity sufficient control to meet the definition of an intangible asset?Multiple choiceL2
- The Tessaly group is analysing several intangible resources. Which of the following items constitute evidence of control over the resource concerned?Multiple choiceL3
- Brenhal, a distributor of industrial supplies, separately acquires from a competitor leaving the market a portfolio of relationships with regular customers who are not bound by contract. In this industry, portfolios of this kind frequently change hands between distributors. The management controller considers that, without a contract, Brenhal cannot control these relationships. What conclusion should be drawn on control?Single choiceL3
- Sylvex has recruited and trained a team of forty data analytics specialists, whose reputation attracts new customers. The employment contracts allow each specialist to resign with one month's notice and contain no other clause. The chief executive wishes to recognise the value of this team as an intangible asset. What should the answer be?Single choiceL2
- Clarvia takes out a three-year subscription to sales management software as a service. The software is hosted on the supplier's servers; the supplier updates it at its sole discretion and makes it available to many other customers. Clarvia accesses it over the internet, without being able to take possession of it or install it on its own servers. Before analysing the configuration costs of the software, Clarvia considers whether it controls the software itself. What conclusion should be drawn?Single choiceL3
- After an intensive sales campaign, Ambrino has increased its regional market share from 12% to 20%. Its customers, individuals, are not bound by any contract and no comparable sale of a customer base has been observed in the industry. The chairman wishes to recognise the market share gained, which he considers lasting, as an intangible asset. Write a memo analysing whether this market share meets the definition of an intangible asset from the perspective of control.JudgmentL3
- Corvalis has set up an in-house academy that trains its engineers in advanced technologies every year. The technical director proposes to recognise as intangible assets, first, the academy's cost for the year and, second, the know-how of its lead engineer, which he considers irreplaceable. No contract or legal right protects this know-how and the engineer can leave the entity freely. Write a judgement memo on these two proposals.JudgmentL3
- Ostravel has developed unpatented technical know-how for treating alloys. Its engineers are bound by a legal duty of confidentiality, the breach of which is sanctioned. From the sole standpoint of control, does Ostravel control the future economic benefits expected from this know-how?Single choiceL2
Future economic benefits8 questions
- True or false? The future economic benefits flowing from an intangible asset may take the form of cost savings, and not only of revenue from sales.True / falseL1
- True or false? Software used only internally cannot provide future economic benefits, since it generates no revenue.True / falseL1
- True or false? A process patent that allows the Ferval foundry to reduce its energy consumption provides future economic benefits, even though its selling prices remain unchanged.True / falseL2
- True or false? An intangible asset provides future economic benefits only if the entity plans to resell the asset itself to a third party.True / falseL2
- In what forms can the future economic benefits of an intangible asset arise?Single choiceL1
- The carrier Quimper Logistique acquires a licence for route optimisation software that will reduce its fuel consumption. Its customer rates remain unchanged. What form do the future economic benefits of this licence take?Single choiceL2Variant
- The manufacturer Aquaflo acquires a patent that allows it to produce and market a new model of water filter. Its existing manufacturing costs are not affected. In what form does this patent provide it with future economic benefits?Single choiceL2Variant
- Which statement about the future economic benefits of an intangible asset is correct?Single choiceL2
Research, development, amortisation and other defined terms8 questions
- Which of these descriptions matches development as defined in IAS 38?Single choiceL1
- True or false? Under IAS 38, research refers to original work, carried out according to a plan, whose aim is to obtain new scientific or technical insight and understanding.True / falseL1
- True or false? The depreciable amount of an intangible asset is equal to its cost, without taking its residual value into account.True / falseL1
- In IAS 38, which term refers to spreading the depreciable amount of an intangible asset methodically over its useful life?Single choiceL1
- The paint manufacturer Colorine applies the results of earlier work to design and test the prototype of a new anti-corrosion paint, before any commercial launch. Under IAS 38, this activity is:Single choiceL2
- The Heliade laboratory launches a planned programme of experiments to discover new properties of superconducting materials, with no specific product or process in view. How should this activity be described under IAS 38?Single choiceL2
- Which of the following statements about the terms defined by IAS 38 are correct?Multiple choiceL1
- Velmor, a manufacturer of industrial pumps, carries out the following activities. Which ones are development under IAS 38?Multiple choiceL2
Recognition criteria14 questions
- True or false? In addition to meeting the definition, an intangible asset is recognised only if it is probable that the attributable future economic benefits will flow to the entity and its cost can be measured reliably.True / falseL1
- True or false? As soon as an item meets the definition of an intangible asset, it is recognised as an asset with no further condition.True / falseL1
- True or false? The recognition requirements of IAS 38 cover only the initial cost of acquiring or creating an intangible asset, not the costs incurred afterwards to add to it, replace part of it or service it.True / falseL1
- True or false? Expenditure whose cost cannot be measured reliably cannot be recognised as an intangible asset, even if it is probable that it will generate future economic benefits.True / falseL2
- In addition to the definition of an intangible asset, what are the two recognition criteria set by IAS 38?Single choiceL1
- Pellane opens a new regional branch. It incurs legal costs for setting up the branch and start-up costs for the branch's activity. The finance director proposes to capitalise them, because the branch will be profitable and the invoices allow the cost to be measured reliably. What should be concluded?Single choiceL2
- Ferlane believes that its reputation and organisation will bring it significant future benefits. Why can it not recognise this internally generated goodwill?Single choiceL2
- Which of the following must the entity demonstrate before recognising an intangible asset?Multiple choiceL1
- The Orvino group is listing its expenditure for the year. Which items can be recognised as intangible assets?Multiple choiceL3
- Trevalia is developing a planning tool internally. All the development-phase criteria are demonstrated except one: developers' hours are not tracked by project and are buried in the IT department's overheads, with no documented allocation key. Management proposes to capitalise a lump sum estimated at half of the department's cost. What should be concluded?Single choiceL2
- Calvenor pays a lump sum to a marketing agency to win new individual customers, who are free to buy elsewhere and bound by no contract; no sale of similar customer relationships is observed in the industry. The finance director notes that the invoice allows the cost to be measured reliably and that additional sales are probable; he proposes to capitalise the amount. Which analysis should be retained?Single choiceL3
- Mardelle, a commodity trader, acquires for a fixed price an exclusive three-year contractual right to a market data feed: the supplier undertakes not to sell this feed to any other player in the region. Mardelle expects to derive probable trading gains from it. It also organises, at its own expense, training for its traders on using the feed. Write a memo concluding on the accounting for these two items of expenditure.JudgmentL3
- True or false? When an entity acquires an intangible asset separately, the criterion relating to the probability of future economic benefits is regarded as met, even if the amount or timing of those benefits remains uncertain.True / falseL1
- Quintarel buys from an inventor, for a cash payment of 120,000, a patent on a filtration system. The amount and timing of future sales of the products using the patent are uncertain. Why are both recognition criteria regarded as met?Single choiceL2
Subsequent expenditure8 questions
- A press group holds a magazine title acquired several years ago. This year, it incurs significant expenditure to redesign the magazine's layout and relaunch its reputation. How does it account for this expenditure?Single choiceL2
- True or false? Expenditure incurred to update and enrich a customer list acquired two years ago can be added to its carrying amount when it increases the list's commercial value.True / falseL2
- Why does IAS 38 consider that subsequent expenditure on an intangible asset is only rarely added to its carrying amount?Single choiceL2
- The Daveron group incurs the following expenditure during the year. Which item must be recognised in profit or loss as soon as it is incurred?Single choiceL3
- A year ago, Elmora acquired a cosmetics brand, recognised as an intangible asset. This year, it hires an agency to reposition the brand: a positioning study, a new logo and new graphic guidelines for the packaging. The marketing director believes this work durably strengthens the value of the brand and asks for it to be added to the brand's carrying amount. What should be concluded?Single choiceL3
- The Valbrune press group acquired the masthead of a regional daily newspaper three years ago, recognised as an intangible asset. To revive sales, it runs a promotional campaign: an agency invoices it …, not yet paid, and marketing staff spend time on it valued at …, payable at the end of the month. Record the entry for the year.Journal entryL2Variant
- Orbelle, a medical equipment wholesaler, holds a file of hospital customers bought last year and recognised as an intangible asset. It has the file's contact details corrected and completed by a data provider, paid … in cash, and then has the quality of the result checked by a consultant whose invoice of … is still unpaid. Record the corresponding entry.Journal entryL2Variant
- Last year, Nephalis separately acquired an in-process research and development project on a sensor, recognised in the balance sheet as development in progress. This year, it pays … in cash for work exploring new scientific avenues, then … for development work incurred after all the development-phase criteria were demonstrated. Record the entry for the year.Journal entryL3
Initial measurement at cost12 questions
- True or false? On initial recognition, an intangible asset is measured at cost.True / falseL1
- True or false? An intangible asset is measured initially at fair value, measurement at cost being merely an option available to entities.True / falseL1
- True or false? For an intangible asset acquired in a business combination, the cost used at initial measurement is its fair value at the acquisition date.True / falseL2
- True or false? When payment for an acquired licence is deferred beyond normal credit terms, its initial cost is the total of the scheduled payments, including the portion that remunerates the credit.True / falseL2
- True or false? The initial cost of an internally generated intangible asset includes the expenditure incurred before the date on which it first met the recognition criteria.True / falseL2
- True or false? An intangible asset received in exchange for another asset is measured at fair value, unless the exchange lacks commercial substance or neither the fair value of the asset received nor that of the asset given up can be measured reliably; in that case, its cost is the carrying amount of the asset given up.True / falseL2
- Tarvine is recognising an operating licence for the first time. On what basis does it measure it initially?Single choiceL1
- Corbeline buys a software licence from a foreign vendor at a list price of 120,000. It obtains a trade discount of 10,000, pays 6,000 of non-refundable import duties and incurs 4,000 of testing to check that the software works properly before it goes live. What is the initial cost of the licence?Single choiceL2
- The Asteval group obtains control of Briven in a business combination and recognises a Briven patent separately from goodwill. In Briven's accounts, the patent cost 200,000 and is carried at 80,000. An independent valuer estimates its fair value at the acquisition date at 350,000. At what amount does Asteval initially recognise the patent?Single choiceL2
- Aeralis receives airport slot rights free of charge from the State by way of a government grant. Which initial measurement treatments does IAS 38 permit?Single choiceL2
- Lindora exchanges a broadcasting licence for a broadcasting licence covering another region, held by a peer. The analysis concludes that the exchange lacks commercial substance. The licence given up has a carrying amount of 140,000 and a fair value of 185,000; the licence received has a fair value of 190,000. At what amount does Lindora initially recognise the licence received?Single choiceL2
- Quenvia is developing a pricing tool internally. The expenditure incurred from 1 January to 31 March 20X1, amounting to 30,000, was expensed. The project first meets all the recognition criteria on 1 April 20X1; the directly attributable expenditure incurred afterwards until the tool goes live amounts to 75,000. What is the initial cost of the asset?Single choiceL2
Cost of a separately acquired intangible asset12 questions
- An entity acquires production planning software. Which of the following items form part of the cost of the intangible asset?Multiple choiceL3
- An entity acquires a perpetual licence for design software at a list price of …, on which the vendor grants a trade discount of …. It bears a non-refundable tax of … and VAT of …, which it fully recovers. A contractor charges … to install the software and bring it to working condition. What is the cost of the intangible asset?CalculationL1
- An entity acquires on credit, from a vendor, a licence for inventory management software invoiced at …. It pays … in cash in fees to a consultant who installs the software and checks that it works properly before it goes live. Record the initial recognition entry.Journal entryL1
- True or false? When an entity imports separately acquired software, the import duties it cannot recover form part of the cost of the intangible asset.True / falseL1
- True or false? The salaries of the entity's IT staff who install and configure acquired software, before it goes live, are expensed because they are not paid to the software vendor.True / falseL1
- A testing laboratory, Biomeris, acquires a licence for sample-processing software. Which of the following items of expenditure is directly attributable to preparing the asset?Single choiceL2
- An architecture firm, Orbis, imports building-modelling software. The vendor grants it a trade discount on the list price. Which statements about the cost of the intangible asset are correct?Multiple choiceL2
- Velora buys from a foreign vendor complaints-management software invoiced at …, on which it obtains a rebate of …. It pays non-refundable import duties of … and VAT of …, which it fully recovers. The salaries of Velora's IT staff assigned to configuring the software, before it goes live, amount to …. What is the cost of the intangible asset?CalculationL1Variant
- The farming cooperative Terralis acquires a licence for a plot-mapping tool at a list price of …, less a trade discount of …. It bears a non-refundable tax of … and VAT of …, which it deducts. An independent geomatics specialist charges … to check that the tool renders the data correctly before it is used. Determine the initial cost of the licence.CalculationL2Variant
- The hotel group Ardena acquires on credit a licence for booking software at a price of …; the vendor grants a rebate of …, deducted from the invoice. The salaries still owed to Ardena's IT staff who configured the software before it went live amount to …. Record the initial recognition entry.Journal entryL1Variant
- The Medisol clinic pays … in cash for imported medical imaging software, together with … of import duties that it will not be able to recover. A consultant, who charges … payable the following month, checks that the images display correctly before first use. Record the acquisition.Journal entryL2Variant
- The veterinary clinic network Vetalia acquires patient-records software for 120,000. Before going live, it incurs 9,000 of consultants' fees to adapt the interfaces, 3,000 of testing and 6,000 of salaries of its internal project team spent on configuration. The IT department also allocates 4,000 of general overheads to the project, and training the vets costs 5,000. What is the cost of the intangible asset?Single choiceL3
Costs excluded and cessation of capitalisation12 questions
- A retailer acquires an online sales platform for …. It then incurs … of configuration and … of tests of proper functioning before going live. It also spends … on training its teams and … on advertising to announce the launch of the site. In the first month after going live, the site, with few visitors, makes an operating loss of …. What is the cost of the intangible asset?CalculationL2
- The acquisition schedule for a business software package contains the following lines, all included in the cost of the asset. Which one is a capitalisation error?Single choiceL2
- True or false? Advertising costs incurred to announce a new service, made possible by a licence that the entity has just acquired, are included in the cost of that licence.True / falseL1
- True or false? Acquired software is capable of operating as intended in March, but the entity waits until June to use it. The hosting costs paid from April to June during this wait are included in the cost of the software.True / falseL2
- A travel agency acquires an online booking engine. Which of the following items of expenditure must be expensed rather than included in cost?Single choiceL1
- When does recognition of costs in the carrying amount of a separately acquired intangible asset cease?Single choiceL2
- A chain of gyms, Fitora, acquires a class-booking app and extends it to a new city. Which of the following items of expenditure must be expensed?Multiple choiceL2
- The haulier Navexa buys route-planning software for …. A consultant configures it for … and the software is capable of operating as intended on 1 March 20X1. However, Navexa only brings it into use on 1 May 20X1 and pays … of hosting for the period in between. Management control also allocates … of general overheads to the project. What is the cost of the intangible asset?CalculationL2Variant
- The news website Quotidia acquires a licence for an editorial search engine for …. Before the engine is operational, it bears … of acceptance-testing fees and … of salaries of its engineers in charge of installation. Once the engine is operational, the audience is slow to come and the business records … of start-up losses; Quotidia also spends … on training the team of its new regional newsroom. Calculate the cost of the licence.CalculationL3Variant
- Corvane's internal auditor's working paper on the acquisition of payroll software contains the following conclusions. Which one is wrong?Single choiceL2
- Santeo acquired a teleconsultation platform, capable of operating as intended on 30 June 20X1 but launched to patients on 1 September 20X1. Its schedule of capitalised costs contains the following lines. Which one is an error?Single choiceL2
- The ferry company Marivo acquires an online ticketing system for 300,000 and pays 20,000 for testing before it is capable of operating as intended, on 1 April 20X1. After that date, it incurs 15,000 of training for port agents, 30,000 for a launch campaign and 8,000 of fees to adjust screens while the system already operates as intended; the online business also suffers 10,000 of start-up losses. What is the initial cost of the system?Single choiceL3
Deferred payment beyond normal credit terms6 questions
- Kestrel acquires a process patent. The seller, whose usual settlement terms are 60 days, offers either a cash payment of … on signing or a single payment of … in three years. Kestrel opts for payment in three years. Determine the cost of the patent and the total interest expense to be recognised over the period of credit.CalculationL3Variant
- The games publisher Pixelune buys the rights to a character licence from a studio, which agrees to be paid in a single instalment, …, after two years, whereas its sales are normally settled at 30 days. No cash price is stated; the two-year discount factor, at the rate of equivalent financing, is …. Calculate the cost of the licence and the total interest to be spread over the period of credit.CalculationL3Variant
- On 1 January 20X1, Ondalis acquires the right to exploit a music catalogue, payable in a single instalment, …, on 31 December 20X2, whereas the seller usually grants 45 days. The cash price equivalent is …. Ondalis spreads the difference over the period of credit by applying the implicit rate of … to the liability outstanding at the start of each year. Determine the cost of the right and the interest expense for 20X1 and for 20X2.CalculationL4
- On 1 January 20X1, the distributor Brenta acquires an exclusive licence to distribute a range of cosmetics, payable in a single instalment, …, on 31 December 20X2, well beyond normal credit terms. The cash price equivalent is …; Brenta calculates interest at the implicit rate of … on the outstanding liability. Record the acquisition entry (E1) and the entry at 31 December 20X1 (E2).Journal entryL3Variant
- On 1 January 20X1, a small brewery, Houblonne, buys the patented recipe of a beer from its inventor, who agrees to be paid … in two years, instead of the 30 days he usually allows. Paid immediately, the patent would have cost …. Houblonne recognises interest at the implicit rate of … on the outstanding liability. Record the acquisition (E1) and the closing entry at 31 December 20X1 (E2).Journal entryL3Variant
- The Solvane group acquires a customer list from a competitor. The contract sets a price of 1,000,000 payable in four years; the seller would have accepted 820,000 in cash, and its usual settlement terms are 30 days. The finance director wants to recognise the asset at 1,000,000, on the grounds that this is the contractual price. Which treatment should be adopted?Single choiceL4
Acquisition as part of a business combination8 questions
- The Alto group obtains control of Brio in a business combination. Brio is carrying out a research and development project on a new material; it has always expensed this expenditure and the project is not on its balance sheet. The project is protected by patent filings and an expert estimates its fair value at 4,000,000 at the acquisition date. Alto's finance director proposes to subsume it in goodwill, since it does not appear on Brio's balance sheet. Which treatment should be used in Alto's consolidated financial statements?Single choiceL4
- In a business combination, the acquirer takes over a brand owned by the acquiree. How is the cost of this brand determined for the acquirer?Single choiceL2
- On obtaining control of Nexo, the Aldra group takes over an in-process research and development project, protected by patents filed by Nexo. Why does Aldra recognise this project separately from goodwill?Single choiceL2
- The Ferval group acquires Lumis, which is carrying out an in-process research and development project that meets the definition of an intangible asset. Lumis has never recognised this project as an asset. Which statements are correct for Ferval's consolidated financial statements?Multiple choiceL3
- The Pavane group obtains control of Selva in a business combination. Selva runs a registered clothing brand, created internally and absent from its balance sheet; it has spent 600,000 on advertising it over the years. An independent valuer estimates the fair value of the brand at 2,500,000 at the acquisition date. At what amount is the brand recognised in Pavane's consolidated financial statements?Single choiceL3
- The Teodor group has owned for twenty years a confectionery brand that it created and developed itself. This year, it acquires Mielina in a business combination; Mielina's brand is measured at 1,800,000 at the acquisition date, and an expert estimates that Teodor's historical brand would be worth 5,000,000. The finance director wishes to present both brands consistently. Which treatment should be adopted in the consolidated financial statements?Single choiceL4
- The laboratory Cerevia acquires the biotech Ostrea in a business combination. Ostrea is running a molecule project protected by patents, which it has always expensed; an expert measures its fair value at 3,000,000 at the acquisition date. After the acquisition, Cerevia continues the project: part of the work consists of exploring new scientific avenues, another part of finalising a process whose feasibility has been demonstrated. The management accountant proposes to subsume the project in goodwill and to capitalise all future expenditure, since the project is now an asset. Write a position paper.JudgmentL4
- Two research projects on composite materials are at the same stage. The first has been run internally by Arvelle from the outset; the second is taken over by Arvelle when it acquires Duna in a business combination, and it meets the definition of an intangible asset. Which comparison is correct in Arvelle's consolidated financial statements?Single choiceL4
Subsequent expenditure on acquired in-process R&D6 questions
- Zelia separately acquired an in-process research and development project, recognised as an intangible asset. It then incurs 200,000 of work aimed at gaining new scientific knowledge on a still exploratory application. How is this expenditure recognised?Single choiceL3
- An in-process research and development project was acquired, either separately or in a business combination, and recognised as an intangible asset. Under which rules is the expenditure subsequently incurred on this project accounted for?Single choiceL3
- Quarza separately acquired a medical sensor project, recorded as development in progress. In 20X1, it pays … for research work on a new, still theoretical application and … of development expenditure which, according to the file documented by management, meets all the criteria for recognising an intangible asset arising from development. Record the entries for the year (E1 for research, E2 for development).Journal entryL3Variant
- When it acquired Halden in a business combination, the Norvik group recognised autonomous navigation software under development. After the acquisition, Norvik's engineers continue the project; their salaries, still owed at the year-end, amount to … for the period when financing for the rest of the project was not yet secured, then to … for the period when all the development-phase criteria were demonstrated. Record the entries (E1 then E2).Journal entryL3Variant
- The laboratory Pharmalis acquired an in-process vaccine project for 1,200,000. During the following year, it incurs 150,000 of research studies on another indication, 80,000 of development from January to April, a period during which not all the development-phase criteria were demonstrated, and 220,000 of development from May to December, once all the criteria were demonstrated. What amount is added to the carrying amount of the project for the year?Single choiceL4
- Ivora separately acquired an in-process battery project, recognised as an intangible asset. The project is now in its development phase and technical feasibility is demonstrated, but at the year-end Ivora has not obtained the financing needed to complete it. Development expenditure for the year amounts to 300,000. The finance director proposes to add it to the carrying amount of the project, since the project is already an asset. Which treatment should be adopted?Single choiceL4
Acquisition by way of a government grant6 questions
- An entity receives an intangible asset free of charge from the State by way of a government grant. Which initial measurements are permitted?Single choiceL3
- The airline Alvea receives landing rights at a regional airport free of charge from the State. Their fair value is estimated at 900,000. Alvea bears 12,000 of legal fees directly attributable to obtaining and preparing these rights. It chooses to recognise the asset at a nominal amount plus directly attributable expenditure. What is the initial amount of the asset?Single choiceL3
- The regulator grants the operator Telvio, by way of a government grant, a licence to use radio frequencies. Which statements are correct?Multiple choiceL3
- The State grants Ventoria free of charge, by way of a government grant, a licence to operate a network of charging stations on motorways. The fair value of the licence is …. Ventoria chooses to recognise the asset and the grant at fair value; under its accounting policy, the grant is presented as deferred income. Record the entry on the award.Journal entryL3Variant
- By way of a government grant, the port authority grants the shipowner Kalypso the right to operate a quay for a nominal price of …, paid in cash. Kalypso also pays … in cash for legal and technical costs directly attributable to preparing this right. The fair value of the right is estimated at …. Kalypso opts for measurement at the nominal amount plus directly attributable expenditure. Record the entry.Journal entryL3Variant
- The fishing cooperative Morvenn is allocated multi-year fishing quotas free of charge by the authorities, by way of a government grant, with a fair value of …. It opts to recognise the asset and the grant at fair value, the grant being presented as deferred income under its accounting policy. Record the allocation of the quotas.Journal entryL3Variant
Exchanges of assets8 questions
- An entity acquires an intangible asset in exchange for another intangible asset. The analysis concludes that the transaction lacks commercial substance. At what amount is the asset received measured?Single choiceL3
- Orvia gives up its licence to distribute a range of tools (cost …, accumulated amortisation …) in exchange for a patent held by Kamel, with no cash adjustment. The analysis concludes that the exchange has commercial substance, and the fair value of each of the two assets is reliably measured at …. What is the cost of the patent received by Orvia?CalculationL3Variant
- The studio Lumaq transfers the rights to a mobile game, carried at … and amortised by …, to a publisher which gives it in return a licence to use a graphics engine. No additional payment is made. The transaction has commercial substance and the fair value of the two assets, reliably measured, is …. At what amount does Lumaq recognise the licence received?CalculationL3Variant
- The radio station Ondine exchanges its broadcasting licence in one region (cost …, accumulated amortisation …) for an equivalent licence in another region, held by a competitor. The documented analysis concludes that the exchange lacks commercial substance; the fair value of each licence is estimated at …. Record the exchange entry.Journal entryL3Variant
- Two small tourism businesses exchange their prospect databases. The one given up by the agency Sirocco is carried at a cost of …, amortised by …. The exchange has commercial substance, but none of the experts consulted manages to measure reliably the fair value of either database. Record the exchange in Sirocco's books.Journal entryL3Variant
- During the year, the Castelo group carries out two exchanges of intangible assets, with no cash adjustment. First exchange: it gives up a regional brand with a carrying amount of 120,000 for software; the transaction has commercial substance and the fair value of both assets is reliably measured at 200,000. Second exchange: it gives up a broadcasting right with a carrying amount of 80,000 for a similar right with a fair value of 150,000; the analysis concludes that there is no commercial substance. What is the total cost of the two assets received?Single choiceL3
- Telvanor exchanges, with no cash adjustment, its broadcasting licence for the North region for the South region licence held by a competitor. The North licence provides stable and recurring advertising revenue; the South licence, in a developing territory, is expected to generate later and more volatile revenue. Both licences have a fair value of 400,000, and the difference between the cash flow profiles is significant relative to that value. Which analysis complies with IAS 38?Single choiceL3
- Marvesse transfers a customer database, with a carrying amount of …, in exchange for a software operating licence, with no cash adjustment. The exchange has commercial substance. The fair value of the database is reliably estimated at …, based on recent transactions in comparable databases and within a narrow range. The fair value of the licence received, estimated at … using an internal model, is reliable but less clearly evident than that of the database given up. What is the cost of the licence received?CalculationL3
Internally generated goodwill13 questions
- True or false? An entity whose market value clearly exceeds the carrying amount of its net assets may recognise the difference as internally generated goodwill.True / falseL1
- True or false? The goodwill that an entity builds up itself in the course of its business is not recognised as an asset in its statement of financial position.True / falseL1
- True or false? An entity may recognise its internally generated goodwill once an independent expert has established its value.True / falseL1
- True or false? Internally generated goodwill is not recognised because it is not an identifiable resource and its cost cannot be measured reliably.True / falseL2
- True or false? Training and promotion expenditure that strengthens an entity's reputation may be accumulated in internally generated goodwill as soon as it is probable that it will produce future economic benefits.True / falseL2
- How does an entity treat, in its financial statements, the goodwill it has generated internally?Single choiceL1
- The Valtera group acquired Norvix in a business combination and recognised, under IFRS 3, goodwill on that acquisition. Its finance director notes that Valtera itself has a loyal customer base and a strong reputation, which in his view would justify its own goodwill of a comparable amount. Which statement is correct?Single choiceL2
- Why is internally generated goodwill not recognised as an asset?Single choiceL2
- The family company Brenac, whose net assets have a carrying amount of 12,000,000, received a takeover offer of 20,000,000 from a competitor, which it turned down. Its manager believes that the difference of 8,000,000 reflects the quality of its customer base, its know-how and its location, and wishes to recognise it as an asset in respect of goodwill. What is your answer?Single choiceL2
- The Ostral group acquired Kemri two years ago; the goodwill arising from this business combination was recognised under IFRS 3. Since then, Ostral's own profitability and reputation have increased sharply. A consultant proposes applying to Ostral the valuation multiple used for Kemri in order to recognise goodwill specific to Ostral, measured consistently. What position do you take?Single choiceL2
- To obtain a loan, Tandor has its business valued by an independent firm. The report attributes 3,500,000 of the value to the customer base, organisation and reputation of the business, without identifying any separate asset. The banker suggests showing this amount in the statement of financial position. What accounting treatment do you adopt?Single choiceL2
- During the year, Helvan funds a training programme for its sales staff and an advertising campaign, in order to strengthen its reputation and customer loyalty. How is this expenditure treated?Single choiceL1
- An independent valuer values Ravenel at 12,000,000, whereas the carrying amount of its identifiable net assets is 8,000,000. The chief executive proposes recognising the difference of 4,000,000 as an asset in Ravenel's statement of financial position. Which answer complies with IAS 38?Single choiceL2
Research phase and development phase14 questions
- True or false? To assess whether an internally generated intangible asset can be recognised, the entity classifies the generation of the asset into a research phase and a development phase.True / falseL1
- True or false? When an entity cannot distinguish the research phase from the development phase of an internal project, it treats all the expenditure on that project as incurred in the research phase.True / falseL1
- True or false? When the phases of an internal project cannot be separated, the entity allocates the expenditure between research and development in proportion to the time elapsed since the project began.True / falseL1
- True or false? For the purpose of the rules on internally generated intangible assets, the terms research phase and development phase have a broader meaning than the definitions of research and development.True / falseL2
- An entity is carrying out an internal project that may result in an intangible asset. What approach does IAS 38 require in order to assess whether the asset can be recognised?Single choiceL1
- Ardel has spent 300,000 on an internal project for a new composite material, without being able to distinguish, in its tracking, the work relating to research from that relating to development. How should these 300,000 be treated?Single choiceL2
- Which of the following statements about the phases of an internal project are correct?Multiple choiceL2
- The Cylvie laboratory has for two years been running an internal project whose exploratory and applied work is so intertwined that it cannot distinguish the two phases. Which of the following consequences are correct?Multiple choiceL3
- The software publisher Quorlis is developing a recommendation engine using an iterative method: each work cycle mixes exploratory work and applied programming, and the time spent is not split between the two. The year's expenditure amounts to 420,000. The finance director proposes capitalising 40% of this amount, the portion he estimates relates to development. What do you recommend?Single choiceL2
- In 20X1, Melvane could not distinguish the phases of its project for a new industrial adhesive and recognised 250,000 as an expense. In early 20X2, it sets up tracking that clearly separates the two phases; on 1 March 20X2, it demonstrates for the first time all the recognition criteria of the development phase. The technical director asks for the 250,000 of 20X1 to be reclassified as an asset. Which answer is correct?Single choiceL3
- Pyrene runs two internal projects. For project Alpha, a formal review documents the move from the research phase to the development phase. For project Beta, the work is so intertwined that no separation is possible. Which analysis is correct?Single choiceL3
- Ivrel is designing a new recycling process. Within the same teams and with no separate tracking, the engineers alternate between tests aimed at understanding the chemical reactions and fine-tuning the industrial pilot. The management controller proposes capitalising the expenditure incurred after the first successful test, which he estimates at 55% of the year's total. Write a memo justifying the classification of the year's expenditure.JudgmentL3
- Voltanis, a battery manufacturer, lists the work carried out by its engineering department during the year. Which items are examples of development activities?Multiple choiceL2
- Granovia designs, builds and operates a small pilot plant producing a new fertiliser. Its size does not allow profitable commercial production: it is used to validate the process before any investment in a factory. To which phase does this activity belong?Single choiceL1
Research expenditure12 questions
- True or false? Research expenditure may be capitalised once it is probable that the project will lead to a new product.True / falseL1
- A biotech start-up carries out work to understand how a molecule acts, with no defined product project. This month, it owes … in salaries to its team of researchers and pays … in cash for laboratory supplies. Record the entry for the month.Journal entryL1
- True or false? The year's research expenditure may be accumulated in an asset account, then expensed at the end of the project if it fails.True / falseL1
- Before the year's financial statements are finalised, you note that the Fenwick laboratory has capitalised, as an asset under construction, 180,000 of expenditure incurred during the research phase of a vaccine project, on the grounds that management considers the development of a product probable. What correction do you propose?Single choiceL2
- True or false? When a project moves from the research phase to the development phase, research expenditure expensed in previous years may be reinstated in the cost of the intangible asset.True / falseL2
- How does an entity account for expenditure incurred during the research phase of an internal project?Single choiceL1
- In 20X1, Galdor incurs 250,000 of expenditure on an internal project that is still in its research phase. Its business plan nevertheless forecasts a highly profitable product. What amount is recognised as an intangible asset for this project at the end of 20X1?Single choiceL2
- As part of the research phase of an internal project, Orvane is studying new lightweight alloys. This quarter, it receives an invoice from a university laboratory for … of tests, not yet paid, and pays … in cash in fees to independent researchers. Record the entry for the quarter.Journal entryL1Variant
- The software publisher Brisane is exploring several algorithmic avenues for a future translation tool; the project is in its research phase, but management considers it very promising and wishes to capitalise its cost. For the month, the remuneration owed to the team amounts to … and the subscription to a simulation service, paid in cash, to …. Record the entry for the month.Journal entryL2Variant
- Breval cannot distinguish the research phase from the development phase of its internal project for a self-cleaning paint. The month's expenditure, paid in cash, amounts to …. The project manager estimates, without detailed tracking, that … of this amount relates to development. Record the entry for the month.Journal entryL2Variant
- The Talmont group is designing a connected agricultural sensor; its engineers carry out, in parallel and without separating them, the study of the physical phenomena and the fine-tuning of the housing. This quarter, a design office invoices it …, not yet paid, and the salaries owed to the engineers reach …. Management wants to record these amounts as an asset. Record the entry for the quarter.Journal entryL2Variant
- In 20X1, Ramee incurs 90,000 of research expenditure, 60,000 of development expenditure before the date on which the recognition criteria are first met, and 40,000 of development expenditure after that date. What amount of research and development expenditure recognised as an expense must it disclose in its notes for 20X1?Single choiceL2
Development phase: recognition criteria12 questions
- To recognise an intangible asset arising from the development phase, which of the following must the entity demonstrate?Multiple choiceL3
- A manufacturer is developing a new sensor. On 1 May, it demonstrates for the first time all the capitalisation criteria for the development phase: a successful prototype, financing obtained, intention and ability to market the sensor, documented market outlets and reliable cost tracking. Development expenditure for the year, paid in cash, amounts to … before that date and … after it. Record the summary entry for the year.Journal entryL3
- A small company is designing a medical monitoring application. In February, a prototype demonstrates technical feasibility. In May, the board approves the completion and marketing of the project, a market study documents the outlets and time tracking allows costs to be attributed to the project reliably. However, the financing needed to complete the development is obtained only in September, when a bank loan is signed; no agreement or indication of financing existed before September. Marketing begins in January of the following year. From when is the development expenditure capitalised?Single choiceL4
- An automotive supplier is developing a next-generation battery. At the year-end, the prototype has passed its safety tests, the executive committee has approved industrialisation and two carmakers have signed letters of intent. However, financing for the pilot line still depends on a bank's approval, expected in three months, and management control does not yet isolate the hours of the engineers assigned to the project. The technical director wants to capitalise all the year's expenditure; the finance director prefers to expense everything out of prudence. Write a judgement memo.JudgmentL4
- On 1 June 20X1, Kestra demonstrates all the development-phase criteria for its new management software. Out of prudence, its finance director is considering continuing to expense subsequent development expenditure. Which statement is correct?Single choiceL2
- At 31 December 20X1, Lumen reviews its heat pump project: the prototype has passed its endurance tests and a market study documents strong demand. Which of the following facts, if observed at that date, prevent an intangible asset arising from development from being recognised?Multiple choiceL3
- Arvea is developing energy management software and spends … on it per month throughout 20X1. It demonstrates all the development-phase criteria for the first time on 1 August 20X1. The period from January to July covers … months and the period from August to December … months. Calculate the amount capitalised and the amount recognised as an expense in 20X1.CalculationL2Variant
- The manufacturer Selko is developing a new control valve. In 20X2, its development expenditure amounts to … in the first quarter, … in the second, … in the third and … in the fourth. Technical feasibility is demonstrated in April, but the financing needed to complete the project is obtained only on 1 July 20X2; all the other criteria have been demonstrated since the beginning of the year. The project manager wants to capitalise the expenditure from April. Calculate the amount capitalised and the amount recognised as an expense in 20X2.CalculationL3Variant
- Norlane entrusts a subcontractor with developing a diagnostic tool. On 1 October 20X1, it gathers for the first time all the evidence required for the development phase. The subcontractor's invoices, all unpaid at the year-end, total … for work before that date and … for work after it. Record the summary entry for 20X1.Journal entryL2Variant
- The Ombrelle studio is developing a 3D rendering engine internally. On 1 May 20X1, it demonstrates all the development-phase criteria for the first time. The salaries owed to the developers assigned to the project amount to … for the period before that date and … for the period after it. After 1 May 20X1, Ombrelle also buys for cash … of components and services consumed by the project. Record the summary entry for 20X1.Journal entryL3Variant
- Daxio is developing, solely for its own needs, a tool for planning its maintenance, which it has no intention of selling. At 1 March 20X1, a prototype works in real conditions, the board has decided to complete and deploy the tool, the maintenance teams are ready to use it, a study documents the expected cost savings, the budget is funded and the project hours are tracked reliably. The finance director argues that no asset can be recognised because there is no market for the tool. What position do you take?Single choiceL4
- Vernat is developing scheduling software intended for sale. At the end of 20X1, the prototype is working, financing is secured, costs are tracked by project and a market study is favourable. However, a competitor has just announced a similar product and the board of directors has not yet decided whether to continue or abandon the project; no decision is expected before the next strategy committee. The project manager wants to capitalise the expenditure of the second half-year, arguing that five of the six criteria are met. Write a position memo.JudgmentL4
Internally generated brands, mastheads, titles and customer lists12 questions
- Which of the following items, when internally generated, are never recognised as intangible assets?Multiple choiceL1
- True or false? A customer list that an entity has built up itself through its sales is not recognised as an intangible asset.True / falseL1
- True or false? A newspaper publisher may recognise as an intangible asset the masthead of its daily paper, created internally, at the cost of its graphic design.True / falseL1
- True or false? Internally generated brands are not recognised notably because their cost cannot be distinguished from the cost of developing the business as a whole.True / falseL2
- True or false? An internally created brand may be recognised as an asset as soon as the expenditure on creating and launching it can be measured reliably.True / falseL2
- Pellia creates its own clothing brand: logo design by a graphic designer and launch advertising campaigns. How does it treat the brand thus generated internally?Single choiceL1
- Corvel buys from a third party, for 400,000, the brand of a range of biscuits; this brand meets the recognition criteria for an intangible asset. In the same year, it launches a second brand, Doria, designed by its own teams, on which it spends 150,000 on design and advertising. Which statement is correct?Single choiceL2
- Through its loyalty programme, Ondine has built up internally a file of 80,000 customers, which a consultant values at 600,000. To recruit these customers, it spent 90,000 on promotional campaigns. What amount is recognised as an intangible asset for this file?Single choiceL2
- At 31 December 20X1, Hestia, a cosmetics group, lists the following items. Which of them are recognised as intangible assets?Multiple choiceL3
- Which of the following statements about internally generated brands, titles and customer lists are correct?Multiple choiceL2
- The cosmetics manufacturer Aldea has spent 2,400,000 over three years creating and promoting its Solene brand, which has become very well known. A firm now values the brand at 9,000,000. The finance director proposes recognising it as an asset, either at its cost or at its estimated value. What is your answer?Single choiceL2
- In 20X1, the Tessin group acquires Brivo in a business combination; the Brivo brand is recognised at its fair value at the acquisition date, i.e. 1,200,000. In 20X2, Tessin spends 300,000 on advertising campaigns to relaunch the Brivo brand and 200,000 to promote its own Tessin brand, created internally. Which treatment is correct in 20X2?Single choiceL3
Cost of an internally generated intangible asset12 questions
- A laboratory internally develops a patented process. Before the date on which the recognition criteria are first met, it incurred expenditure of …. From that date, it incurs … of materials and services used, … of employee benefits for staff assigned to the project and … of fees to register the patent. A share of general administrative overheads of …, with no direct link to the project, is also allocated to it. What is the cost of the intangible asset?CalculationL2
- Orbelis internally develops scheduling software; the recognition criteria have been met for several months. Which of the following expenditures, incurred after that date, is part of the cost of the intangible asset?Single choiceL2
- Vectane, a laboratory, is developing a manufacturing process for a vaccine; the recognition criteria of the development phase are met. Which of the following expenditures must be excluded from the cost of the intangible asset?Single choiceL2
- Which of the following expenditures, incurred after the date on which an internal project meets the recognition criteria, are part of the cost of the intangible asset? More than one answer may be correct.Multiple choiceL2
- Lunastra, a media group, is developing a streaming platform. The controller prepares the list of project expenditures to be left out of the cost of the intangible asset. Which ones must be left out? More than one answer may be correct.Multiple choiceL3
- Brevalis is developing diagnostic software that has met the recognition criteria since the beginning of the year. During the year, it incurs … of materials and services consumed by the project, … of employee benefits for the assigned developers, … of amortisation of a patent used to design the software, … of training for future users and … of sales brochures. What is the cost of the intangible asset at year end?CalculationL2Variant
- Corvane, a chemicals company, is developing a synthesis process. Before the date on which the project first meets the recognition criteria, it incurs …. Afterwards, it incurs … of materials consumed, … of employee benefits for assigned staff, … of patent registration fees, … of amortisation of a technology licence used by the team, … of overheads that are not directly attributable and … of losses on failed trials caused by identified inefficiencies. What is the cost of the intangible asset?CalculationL3Variant
- Ondira develops an online booking platform throughout 20X1. Each month, it incurs … of employee benefits for staff assigned to the project and … of hosting services consumed by the development. The recognition criteria are first met on 1 September 20X1. In December 20X1, it also incurs … to train the agents who will operate the platform. What is the cost of the intangible asset at 31 December 20X1?CalculationL3Variant
- Stelmar, an engineering firm, develops simulation software in 20X2. The project's direct costs (assigned staff and services consumed) amount to … from January to March, … from April to June, … from July to September and … from October to December. The project first meets the recognition criteria on 1 July 20X2. In the second half-year, the team also uses a computing licence whose amortisation amounts to …, and management allocates … of head office costs that are not directly attributable to the project. What is the cost of the intangible asset at 31 December 20X2?CalculationL3Variant
- Valtera is developing fleet management software for which the recognition criteria are met. For the quarter, it records … of employee benefits for staff assigned to the project (not yet paid), … of external services consumed by the development (paid), … of amortisation of a software licence already recognised as an asset and used by the team, and … of training (paid) for the managers who will operate the software. Record the summary entry for the quarter.Journal entryL2Variant
- Pharmelia, a laboratory, demonstrated on 1 March 20X3 all the recognition criteria for a purification process. From March to June 20X3, it consumes … of materials (paid), records … of employee benefits for assigned staff (to be paid), pays … of patent registration fees and receives from its parent an invoice of … for general administrative costs with no direct link to the project. Record the summary entry for the period.Journal entryL3Variant
- Solvira is developing the control software for a dosing robot. The recognition criteria are first met on 1 March 20X4. Expenditure for 20X4: 30,000 in January and February; then, from March, 180,000 of employee benefits for the assigned engineers, 25,000 of consumables and testing services, 4,000 of patent registration fees, 8,000 of operator training, 14,000 for reworking a faulty module because of identified inefficiencies and 20,000 as a share of head office costs. The CFO asks you for the cost of the intangible asset at 31 December 20X4. Which amount do you retain?Single choiceL3
Expenditure recognised as an expense15 questions
- An entity acquires new management software from a vendor. Which of these costs is recognised as an expense when incurred?Single choiceL1
- True or false? Expenditure on an advertising campaign launching a new product, broadcast during the year, is recognised as an expense, even if management expects sales from it over several years.True / falseL1
- True or false? The cost of a training programme for sales staff may be recognised as an intangible asset, because the skills acquired will generate future sales.True / falseL1
- True or false? The costs of relocating the head office to another city, including moving the teams, may be recognised as an intangible asset and amortised over the term of the new lease.True / falseL2
- Which of these expenditures is recognised as an expense, with no possibility of being included in the cost of an intangible asset?Single choiceL1
- Norvelle group sets up a new subsidiary to start a bicycle rental business. It incurs legal costs to incorporate the company and start-up costs for the business before opening. How is this expenditure treated?Single choiceL2
- Which of the following expenditures are recognised as an expense? More than one answer may be correct.Multiple choiceL1
- Maraval, a retail chain, launches online sales. During the year, it incurs the expenditure below; the ordering module developed internally has met the recognition criteria since the beginning of the year. Which items are recognised as an expense? More than one answer may be correct.Multiple choiceL2
- Lumeo launches a new range of drinks and pays … in cash for a television advertising campaign, broadcast during the year. Management expects the campaign to support sales for three years. Record the entry.Journal entryL1Variant
- Ombrelle, an architecture firm, moves its design team to new premises. It receives, not yet paid, an invoice of … to train the team on a new modelling tool and an invoice of … for moving and team transfer costs, with no fit-out works. The administrative director proposes to recognise them as an intangible asset. Record the correct entry.Journal entryL2Variant
- Altivo, a cosmetics company, created its own brand two years ago. In 20X5, it spends 300,000 on advertising and promotion of this brand and 40,000 to train its sales advisers. The CFO proposes to recognise 340,000 as an asset labelled Altivo brand, amortised over five years, because brand awareness has clearly grown. Which position do you take?Single choiceL2
- Prisméa, an industrial group, reorganises its packaging division in 20X6: 120,000 of consultants' fees to redesign the organisation and 45,000 to move a team to another site. The board wishes to spread this 165,000 over the three years in which it expects productivity gains. Which treatment complies with IAS 38?Single choiceL2
- Fleurdane, a mail-order retailer, has its spring catalogue printed. The printer delivers the catalogues on 12 December 20X1; Fleurdane becomes their owner on that date and sends them to its customers in January 20X2. The reporting period ends on 31 December 20X1. When is the cost of the catalogues recognised as an expense?Single choiceL2
- Pradelys has a reporting date of 31 December 20X1. It has paid two invoices from its advertising agency: first, …, paid on 15 December 20X1, for a television campaign that the agency will produce and have broadcast in February 20X2; second, … for advertising spots that the agency fully produced and delivered in November 20X1, and that Pradelys will itself show on the screens in its stores in January 20X2. What amount is recognised as a prepayment asset at 31 December 20X1, and what amount is recognised as an expense in 20X1?CalculationL2
- The Corvalis group acquires Lumetra in a business combination within the scope of IFRS 3. Part of the price pays for the collective experience of Lumetra's sales teams; according to the analysis performed under IFRS 3, this item cannot be recognised as an intangible asset. How is the corresponding amount accounted for?Single choiceL2
Past expenses not recognised as an asset8 questions
- Last year, a video game publisher expensed … of development expenditure on a new graphics engine, as the capitalisation criteria were not met. This year, the criteria are met for the first time on 1 April. The project cost … from January to March, then … from April to December. Management wishes to reinstate all the project expenditure as an asset. What is the cost of the asset at the year-end?CalculationL3
- A controller reviews the year-end entries for a development project whose capitalisation criteria were first met during the year. Which of the proposed entries is an error?Single choiceL2
- True or false? Development expenditure recognised as an expense in 20X1, because the criteria were not met, may be added in 20X2 to the cost of the intangible asset when the project finally meets those criteria.True / falseL2
- Taliora recognised as an expense in 20X1 250,000 of development expenditure on a sensor, as the criteria were not yet met. On 1 February 20X2, the project meets all the criteria for the first time. How is this 250,000 treated in the 20X2 financial statements?Single choiceL2
- Keldar is developing marine navigation software. In 20X1, as the criteria were not met, it recognised … of development expenditure as an expense. The criteria have been met since 1 January 20X2; in 20X2, it incurs … of costs directly attributable to the software and … of advertising for its launch. Management wishes to recognise as an asset all the project expenditure since its inception. What is the cost of the intangible asset at 31 December 20X2?CalculationL2Variant
- Velmora is designing software for medical devices. In 20X1, it recognised as an expense … of research and … of development. In 20X2, the project first meets the recognition criteria on 1 June: it cost … from January to May, then … of directly attributable costs from June to December. In December 20X2, Velmora also incurs … to train hospital users. The CFO proposes to recognise as an asset all project expenditure since 20X1. What is the cost of the intangible asset at 31 December 20X2?CalculationL3Variant
- Anselm is developing a machine translation tool for which the recognition criteria are first met on 1 May 20X3. At 31 December 20X3, the accountant prepares the entries below. Which one is wrong?Single choiceL2
- The cost worksheet for a recycling process developed by Ferrance, prepared for the 20X4 year end, contains the lines below. Which one contains an error?Single choiceL3
Choice of cost or revaluation model12 questions
- A transport entity elects the revaluation model for one of its route operating licences, which are traded on an active market. What follows for the other licences in the same class?Single choiceL1
- True or false? After initial recognition, an entity chooses either the cost model or the revaluation model as its accounting policy for measuring its intangible assets.True / falseL1
- True or false? A taxi company may revalue only its most valuable licence and keep at cost its other licences of the same class, all of which are traded on an active market.True / falseL1
- True or false? In a class of intangible assets measured using the revaluation model, an asset for which there is no active market is carried at its cost less accumulated amortisation and impairment losses.True / falseL2
- True or false? An entity may apply the cost model to its class of patents and the revaluation model to its class of transport licences, which are traded on an active market.True / falseL2
- Between which measurement models does an entity choose for its intangible assets after initial recognition?Single choiceL1
- An entity adopts the revaluation model for a class of intangible assets. By reference to what is the fair value of these assets determined?Single choiceL1
- Pescalia, a fishing company, holds a class of fishing quotas, all traded on an active market except one quota for a rare species, which is never traded. Pescalia adopts the revaluation model for this class. How is the rare-species quota measured?Single choiceL2
- Cerdane group holds two classes of intangible assets: industrial patents, for which there is no active market, and taxi licences, traded on an active market. The CFO wishes to move to the revaluation model for all its intangible assets. Which analysis is correct?Single choiceL2
- Which of the following statements on the choice of measurement model for intangible assets are correct? More than one answer may be correct.Multiple choiceL1
- Lactavia, a cooperative, holds a class of milk production quotas, almost all traded on an active market, and a separate class of software. It is considering adopting the revaluation model for its quotas. Which statements are correct? More than one answer may be correct.Multiple choiceL2
- Ondéa, a broadcaster, measures its class of broadcasting licences using the revaluation model. It acquires a new licence in the same class, traded on an active market. How is this licence measured after initial recognition?Single choiceL2
Cost model12 questions
- True or false? Under the cost model, an intangible asset is carried at its cost less any accumulated amortisation and any accumulated impairment losses.True / falseL1
- True or false? Under the cost model, when the market price of a licence increases, its carrying amount is raised to that new price.True / falseL1
- True or false? For an intangible asset measured under the cost model, an impairment loss determined by applying IAS 36 reduces its carrying amount.True / falseL2
- True or false? Under the cost model, the carrying amount of an intangible asset whose useful life has been indefinite since initial recognition equals its cost less accumulated impairment losses only.True / falseL2
- True or false? The cost model is reserved for internally generated intangible assets; acquired intangible assets must be revalued.True / falseL1
- Under the cost model, at what amount is an intangible asset presented after initial recognition?Single choiceL1
- Tessaly measures its software using the cost model. For an acquired software, the data at the reporting date are: cost 120,000; accumulated amortisation 36,000; accumulated impairment losses 10,000. What is its carrying amount?Single choiceL1
- Harlan, which applies the cost model to its licences, holds a broadcasting licence acquired for 250,000, whose accumulated amortisation reaches 100,000 at the reporting date; no impairment loss has been recognised. An expert estimates the fair value of the licence at 190,000. What is its carrying amount?Single choiceL2
- Quimper Data measures under the cost model a database acquired for 80,000, with amortisation of 32,000 at the reporting date. At that date, applying IAS 36, it recognises an impairment loss of 12,000, whose amount is provided by the expert. What is the carrying amount of the database after this loss?Single choiceL2
- Bravane acquires an operating licence for 60,000, available for use on 1 January 20X1, and measures it under the cost model. Its useful life is 5 years, its residual value is nil and the straight-line method reflects the expected pattern of consumption. No impairment loss is recognised. What is its carrying amount at 31 December 20X3?Single choiceL2
- The closing trial balance of Mirandel, which applies the cost model, shows for its acquired patents: gross amount 500,000; accumulated amortisation 180,000, including the charge for the year of 50,000; accumulated impairment losses 40,000. What carrying amount of the patents appears in the statement of financial position?Single choiceL2
- Three years ago, Volterre acquired for 400,000 a licence whose useful life is assessed as indefinite; it applies the cost model. Accumulated impairment losses recognised since acquisition amount to 30,000. An intern proposes to amortise the licence over 10 years. What is the carrying amount of the licence at the reporting date?Single choiceL2
Revaluation model and active market requirement10 questions
- Pêcheries Armorine, which applies the cost model to its intangible assets, is considering adopting the revaluation model for its portfolio of transferable fishing licences. What condition must be met for a licence in this portfolio to be revalued?Single choiceL3
- Agri-Quotas Ouest has opted for the revaluation model for its class of production quotas, most of which are traded on an active market. Which of the following statements are correct?Multiple choiceL4
- At 31 December 20X2, Armement Kerdual revalues for the first time a transferable fishing licence acquired for …, whose accumulated amortisation amounts to …. Its fair value, measured by reference to an active market, is …. The entity eliminates the accumulated amortisation against the gross carrying amount of the asset. No decrease in value has previously been recognised. The whole class of fishing licences to which this asset belongs, traded on that active market, is revalued at the same date. Ignore deferred tax effects. Calculate the revaluation surplus recognised in other comprehensive income and the gross carrying amount of the licence after revaluation.CalculationL3Variant
- Taxis Solenne applies the revaluation model to its taxi licences, which are traded on an active market. At 30 June 20X3, a licence bought for … shows accumulated amortisation of …; its fair value at that date reaches …. Under its accounting policy, Taxis Solenne restates the gross carrying amount proportionately to the change in carrying amount. This asset has never suffered a decrease. Ignore deferred tax effects. Calculate the revaluation surplus and the accumulated amortisation after revaluation.CalculationL3Variant
- Laiterie Brocéliane revalues a milk production quota by reference to an active market. At 31 December 20X1, the quota is revalued to 240,000; it is amortised on a straight-line basis over its remaining useful life of 4 years. During 20X2, trading on that market ceases and no observable price is available at the year-end. No impairment loss is identified. What is the carrying amount of the quota at 31 December 20X2?Single choiceL3
- Transports Vallerin applies the revaluation model to its class of taxi licences, which are traded on an active market in the large cities where it operates. It has just acquired a licence in a small town where no licences are traded. The finance director proposes revaluing this licence on the basis of a present value of expected takings, calculated by an external firm, in order to keep the class uniform. Write a judgement memo on the measurement of this licence and on the disclosures.JudgmentL4
- The management of Halvérac is considering adopting the revaluation model for several intangible assets. Which statements are correct?Multiple choiceL3
- After an internal process lasting several months, Pescarel has obtained a freely transferable production quota, traded in an active market. The expenditure incurred before the recognition criteria were met (30,000) was recognised as an expense; only the expenditure incurred afterwards (50,000) forms the cost of the asset. Pescarel applies the revaluation model to this class of assets. At the reporting date, the market price of the quota is 140,000. What may Pescarel do?Single choiceL3
- Ondaris holds production quotas traded in an active market, acquired for … and amortised on a straight-line basis over … years, with no residual value. It applies the revaluation model. After … years of amortisation, it revalues the quotas at …; the remaining useful life is unchanged. Under its accounting policy, Ondaris transfers each year to retained earnings the part of the revaluation surplus realised through the use of the asset. For the year following the revaluation, calculate the amortisation based on the revalued amount, the amortisation that would have been based on historical cost and the amount transferred. Deferred tax is ignored.CalculationL3
- Taxelis applies the revaluation model to its taxi licences, which are freely transferable and traded in an active market. It sells one of them; at the disposal date, the revaluation surplus in equity relating to this licence amounts to 70,000. Under its accounting policy, Taxelis transfers the whole revaluation surplus when the asset is disposed of. Deferred tax is ignored. How are these 70,000 accounted for?Single choiceL3
Revaluation increase6 questions
- An entity applies the revaluation model to an intangible asset. At a previous revaluation, a decrease in the value of this asset was recognised in profit or loss. At the following year-end, the asset's fair value increases. How is this increase recognised?Single choiceL3
- Taxis Orvanne revalues its class of taxi licences. Last year, licence No. 12 suffered a decrease of 15,000 recognised in profit or loss; licence No. 27, which has never suffered a decrease, did not change. This year, only licence No. 27 sees its fair value increase by 15,000. How is this increase recognised?Single choiceL3
- Laiterie Morvelle holds a milk production quota acquired for … on 1 January 20X1. The quota, whose useful life is indefinite, is not amortised; it is measured under the revaluation model by reference to an active market. Its fair value is … at 31 December 20X1, then … at 31 December 20X2. Ignore deferred tax effects. Calculate, for 20X2, the portion of the increase recognised in profit or loss and the portion recognised in other comprehensive income.CalculationL3Variant
- Les Vergers Haldane hold a transferable irrigation right, with an indefinite useful life and not amortised, revalued by reference to an active market. At the previous revaluation, a decrease of … was recognised in profit or loss for this right, bringing its carrying amount down to …. No other revaluation has taken place since. At the year-end, its fair value amounts to …. Ignore deferred tax effects. Calculate the portion of the increase recognised in profit or loss and the portion recognised in other comprehensive income.CalculationL3Variant
- Pêcheries du Ponant hold a transferable fishing authorisation, with an indefinite useful life and not amortised, measured under the revaluation model. At the previous revaluation, a decrease of … was recognised in profit or loss for this asset, whose carrying amount was brought down to …. At the year-end, fair value measured by reference to the active market is …. Ignore deferred tax effects. Record the revaluation entries.Journal entryL3Variant
- Taxis Bellerive apply the revaluation model for the first time to a taxi licence traded on an active market. This licence, bought for …, is amortised: its accumulated amortisation reaches …, while the market values it at …. Bellerive eliminates the accumulated amortisation against the gross carrying amount. The licence has never suffered a decrease. The whole class of taxi licences to which this asset belongs, traded on that active market, is revalued at the same date. Ignore deferred tax effects. Record the single revaluation entry.Journal entryL3Variant
Revaluation decrease6 questions
- A revalued intangible asset has a revaluation surplus with a credit balance of 20,000 in equity. At the year-end, its fair value decreases by 35,000. How is this decrease recognised?Single choiceL3
- Coopérative Sylvaine revalues its class of production quotas. The North quota has a revaluation surplus with a credit balance of 40,000; the South quota has never been revalued upwards. At the year-end, only the fair value of the South quota falls, by 10,000. How is this decrease recognised?Single choiceL3
- Sucrerie Vallarde holds a transferable sugar beet production quota, with an indefinite useful life and not amortised, measured under the revaluation model. Before the year-end revaluation, its carrying amount is … and the revaluation surplus relating to this quota has a credit balance of …. Fair value measured by reference to the active market is …. Ignore deferred tax effects. Calculate the portion of the decrease recognised in other comprehensive income and the portion recognised in profit or loss.CalculationL3Variant
- Air Méridane owns a transferable landing slot, not amortised because its useful life is indefinite, which it revalues by reference to an active market. The revaluation surplus accumulated for this slot amounts to …. At the reporting date, the slot is carried at … before revaluation, while the market now values it at …. Ignore deferred tax effects. Which portions of the decrease go to other comprehensive income and to profit or loss respectively?CalculationL3Variant
- Domaine Castelmaure holds transferable vine planting rights, with an indefinite useful life and not amortised, revalued by reference to an active market. Before the year-end revaluation, their carrying amount is … and the related revaluation surplus has a credit balance of …. Their fair value is now …. Ignore deferred tax effects. Record the revaluation entries.Journal entryL3Variant
- Armement Kerlouan applies the revaluation model for the first time to a transferable individual fishing quota, amortised over its finite useful life. The quota cost … and its accumulated amortisation amounts to …. The active market values it at …. The entity eliminates the accumulated amortisation against the gross carrying amount. The whole class of fishing quotas to which this asset belongs, traded on that active market, is revalued at the same date. Ignore deferred tax effects. Record the revaluation entry.Journal entryL3Variant
Assessment of useful life: finite or indefinite13 questions
- Which of the following factors does the entity consider when assessing the useful life of an intangible asset?Multiple choiceL3
- A radio station acquires a broadcasting licence granted for ten years by the regulator. The licence can be renewed with no limit at a low administrative cost; the regulator has always renewed it for operators meeting their obligations, and the station intends to keep it and has the means to meet those obligations. Its transmission equipment should be replaced in six years, with no effect on the right to broadcast. The finance director proposes amortising the licence over six years. Write a judgement memo on the useful life of the licence.JudgmentL4
- What does an indefinite useful life mean for an intangible asset?Single choiceL2
- An entity concludes that an intangible asset has a finite useful life. In what form can that life be expressed?Single choiceL2
- Which of the following statements on assessing the useful life of an intangible asset are correct?Multiple choiceL3
- Imprimerie Dalbret acquires a perpetual licence for a control module that only works with its current management platform. The platform vendor has announced the end of support in 4 years and Dalbret has planned its migration to another system at that date; the module will not be compatible with the new system. What useful life should be used for the module?Single choiceL3
- Thermique Escaut acquires the brand of a range of oil-fired boilers that is firmly established in its market. Regulation already adopted will ban the sale of these boilers in 7 years. The brand is closely associated with this technology and the entity has neither the intention nor the ability to use it for other products; no cash flows are expected from it after the ban. Its legal protection is renewable without limit at a low cost. What conclusion should be reached on the brand's useful life?Single choiceL4
- Eaux de Sorbiers acquires a mineral water brand that has been marketed for more than a century. Its legal protection, for a term of 10 years, is renewable without limit for a small fee, and the entity has always renewed its other brands. Market studies show stable demand, the product is not exposed to technological obsolescence and the advertising expenditure needed to maintain the brand is moderate and budgeted. The entity intends to exploit the brand with no time limit. What treatment should be applied?Single choiceL4
- An entity concludes that an acquired brand has an indefinite useful life. What information must it disclose in this respect in the notes?Single choiceL3
- In a workpaper, the accounting team of Studio Kalimba concludes on an indefinite useful life for an acquired video game franchise. The only documented justification is management's intention to keep publishing games under this franchise. What should be completed as a priority?Single choiceL4
- Comparateur Hélianthe acquires an online booking platform and separately identifies the site's brand and domain name. Management wants to adopt an indefinite useful life: the domain name is renewed each year at a low cost and traffic has been stable for several years. However, the industry is undergoing rapid technological change, two competitors have recently disappeared after customers switched to mobile apps, and maintaining the audience requires heavy marketing and technical investment, which the entity has not budgeted beyond 3 years. Write the workpaper section on the useful life of the brand and the domain name.JudgmentL4
- Which of the following facts are relevant factors that may lead an entity to adopt a shorter useful life for an intangible asset?Multiple choiceL2
- The management of Celmont considers that its beverage brand, acquired three years ago, has an indefinite useful life. Which statement about this assessment is correct?Single choiceL2
Useful life of contractual or legal rights and renewals10 questions
- An entity acquires a licence to use a technology for 5 years, renewable once for 5 years. Renewal is automatic, at a negligible cost, and the entity has always renewed this type of licence. However, it plans to replace the technology after 8 years, when its new platform is ready. What useful life should be used for the licence?Single choiceL3
- An entity acquires a licence to exploit a patent for a contractual term of 6 years, not renewable. It plans to use the technology for only 4 years, then replace it with an internally developed solution. What useful life should be used?Single choiceL2
- An entity acquires a right to operate a motorway catering concession for 5 years, renewable once for 5 years. Renewal is granted only on payment of a new entry fee close to the initial price. The entity expects to run the business for at least 10 years. What useful life should be used?Single choiceL2
- Laboratoires Vireux acquire for … a licence to use a scientific database, granted for … and renewable once for …. Renewal is automatic, for negligible administrative fees, and the entity has evidence showing that it will obtain it. It plans to use the database for …. The licence is amortised on a straight-line basis, with no residual value. Determine the useful life and the annual amortisation charge.CalculationL2Variant
- Studio Ondine acquires for … the right to exploit a film catalogue commercially for …. At expiry, the right can be extended, but only against payment of a new price negotiated on market terms. Studio Ondine expects to exploit the catalogue for …. The right is amortised on a straight-line basis, with no residual value. What are the useful life of the right and its annual amortisation charge?CalculationL3Variant
- Autocars Cévenols obtain for … an authorisation to operate a scheduled route, granted for … and renewable twice, each renewal covering …. The authority has always renewed these authorisations, at a low administrative cost, for operators complying with their specifications, which the entity does. However, it plans to abandon the route after …, when a rail link opens. The authorisation is amortised on a straight-line basis, with no residual value. Determine the useful life and the annual amortisation charge.CalculationL3Variant
- Boulangeries Ferrand acquire a franchise for 5 years. The contract provides for a possible renewal for 5 years, at the sole discretion of the franchisor, who last year refused to renew several franchisees in the region. Ferrand would like to operate the outlet for 10 years. What useful life should be used for the franchise?Single choiceL3
- Opérateur Telvane acquires a licence to use radio frequencies for 15 years. At expiry, the frequencies will be reallocated by auction, at a market price the entity estimates to be comparable to the initial price. The strategic plan provides for abandoning the technology using these frequencies after 12 years. The chief executive wants to amortise the licence over 30 years, assuming it will be renewed. Write a judgement memo on the useful life of the licence.JudgmentL3
- Fréjanel holds a 10-year operating licence for a port terminal, renewable once for 10 years with the approval of the port authority, for a small administrative fee. Management intends to apply for renewal. Under what condition may Fréjanel use a useful life of 20 years?Single choiceL3
- Arvenor acquires for 200,000 a 4-year licence to operate a mineral water spring. The licence can be renewed for a further 4 years, but renewal requires the payment of a fee of 180,000, which is significant compared with the benefits expected from the renewal. Arvenor intends to renew. Which useful life should be used and how should the renewal fee be analysed?Single choiceL3
Start of amortisation: available for use12 questions
- An entity acquires an operating licence for …, amortised on a straight-line basis over a useful life of …, with no residual value. The licence is available for use on 1 April, but the entity only starts using it on 1 July. What is the amortisation charge for the year ending 31 December?CalculationL2
- True or false? Amortisation of an intangible asset with a finite useful life begins as soon as it is available for use, even if the entity only actually uses it later.True / falseL1
- True or false? Amortisation of a software licence begins when the purchase contract is signed, even if several months of installation are still needed before the software can operate.True / falseL1
- True or false? Amortisation of an intangible asset with a finite useful life ceases at the earlier of the following two dates: the date it is classified as held for sale under IFRS 5 and the date it is derecognised.True / falseL1
- True or false? An entity that capitalises development expenditure must amortise the asset under development from the first amount capitalised, without waiting for the project to be completed.True / falseL2
- From what date does an intangible asset with a finite useful life start to be amortised?Single choiceL1
- Transports Lemerle buy planning software on 1 February 20X1. Installation and configuration are completed on 1 March 20X1: the software is then available for the use intended by management. After user training, it is used from 1 May 20X1. From what date is the software amortised?Single choiceL2
- An entity amortises a licence with a finite useful life on a straight-line basis. On 30 September 20X2, the licence is classified as held for sale under IFRS 5; it is sold and derecognised on 31 January 20X3. Until what date is it amortised?Single choiceL2
- Cabinet Ravenne acquires on 1 March 20X1 a document management software licence for …, amortised on a straight-line basis over …, with no residual value. The software has to be integrated into the firm's information system: the work is completed on 1 September 20X1, the date on which it is available for use. The teams only use it from 1 November 20X1. Calculate the amortisation charge for the year ended 31 December 20X1.CalculationL2Variant
- Assurances Pérignac complete on 1 October 20X2 the development of a claims management application, whose capitalised cost amounts to …. On that date, the application is available for use; however, it will only be rolled out to claims handlers on 1 January 20X3. The application is amortised on a straight-line basis over …, with no residual value. What is the amortisation charge for the year ended 31 December 20X2?CalculationL2Variant
- Verreries Lunel, whose financial year ends on 31 March, acquire a process patent on 1 August 20X1 for …. The patent is available for use as soon as it is acquired, but the entity only starts exploiting it on 1 February 20X2, for lack of orders. It is amortised on a straight-line basis over …, with no residual value. Calculate the amortisation charge for the year ended 31 March 20X2.CalculationL2Variant
- Éditions Morlaix amortise on a straight-line basis, over … and with no residual value, a distribution licence acquired for … and available for use for several years. On 31 May 20X3, the licence is classified as held for sale under IFRS 5; it is sold and derecognised on 31 October 20X3. Calculate the amortisation charge for the year ended 31 December 20X3.CalculationL2
Amortisation method and charge13 questions
- An entity uses a process patent whose benefits are consumed mainly in the first years, as the technology then becomes less and less competitive. This pattern is reliably documented. Which amortisation method should it use?Single choiceL3
- An entity acquires for … a manufacturing licence allowing it to produce at most … of a patented component, within a term of …. It expects to reach this cap well before the end of the term: the benefits of the licence are therefore consumed as production occurs. It produces … in the first year. No residual value is expected. What is the amortisation charge for the first year?CalculationL3
- An entity holds exclusive distribution rights acquired for …, available for use since the start of the year. Their useful life is estimated at …; the pattern of consumption of benefits cannot be determined reliably and no residual value is used. Record the amortisation entry for the year.Journal entryL2
- True or false? A firm of architects acquires a modelling software licence for 120,000, usable for 4 years. The pattern in which the benefits are consumed cannot be determined reliably and no residual value is assumed. The annual amortisation charge is 30,000.True / falseL1
- True or false? IAS 38 requires the straight-line method for all intangible assets with a finite useful life, whatever the pattern in which their benefits are consumed.True / falseL2
- The management accountant of a logistics company must select the amortisation method for separately acquired warehouse management software. Which criterion should guide that choice?Single choiceL2
- A biotechnology company is drafting its amortisation policy for intangible assets with a finite useful life. Which of the following statements comply with IAS 38?Multiple choiceL3
- A flight school acquires a flight simulation software licence for …. The contract allows at most … hours of simulation, and the school expects to use them all. The licence's benefits are therefore consumed as simulation hours are used. During the first year, students completed … hours. No residual value is expected. What is the amortisation charge for the first year?CalculationL2Variant
- An agricultural engineering firm acquires, for …, a right of access to a satellite image bank, limited to … image downloads over a contractual period of … years. The download cap will be reached well before the contract expires: it is the cap that determines the consumption of the benefits. During the year, … images were downloaded. No residual value is expected. What is the amortisation charge for the year?CalculationL2Variant
- A pharmacy chain closes its accounts on 31 December 20X1. It acquired prescription management software for …, ready for use on 1 April 20X1, that is … months before the year-end. Its useful life is … years; the pattern of consumption of the benefits cannot be determined reliably and no residual value is assumed. Record the amortisation entry at 31 December 20X1.Journal entryL2Variant
- The Fournil d'Opale bakery network buys an exclusive regional franchise contract for …. The contract is signed in March 20X3, but the rights can only be exercised from 1 July 20X3, when the first outlet opens, that is … months before the year-end of 31 December 20X3. The useful life is … years, the straight-line method is used and the residual value is nil. Which amortisation entry should be recorded for 20X3?Journal entryL2Variant
- Lumivert acquires a licence to operate a lighting process for 900,000 and will use it for 6 years. A competitor has contractually committed to buy the licence back for 180,000 at the end of those 6 years. The benefits are consumed evenly and the straight-line method is used. The intern calculates an annual charge of 150,000. What is the correct annual charge?Single choiceL3
- Nérédis uses a patent on a moulding process to manufacture its finished products. The annual amortisation of the patent amounts to 30,000. At the reporting date, some of the products manufactured during the year are still in inventory. How is the amortisation of the patent accounted for?Single choiceL2
Revenue-based amortisation: rebuttable presumption6 questions
- A board game publisher proposes to amortise the licence for a comic-strip character in proportion to the revenue earned from the games that use it, its sales forecasts being considered reliable. How should this proposal be assessed?Single choiceL3
- In which of the following situations can an entity rebut the presumption that revenue-based amortisation is inappropriate?Single choiceL3
- The audit committee of a media group is reviewing the revenue-based amortisation used for certain acquired rights. Which of the following statements are correct?Multiple choiceL4
- Canal Boréal acquires the exclusive right to broadcast a television game show format for 6,000,000. The contract provides that the right ends as soon as the cumulative advertising revenue generated by the programme reaches 30,000,000, with no time limit. The right has a nil residual value. Management estimates that this threshold will be reached in about 5 years. During the first year, the programme's advertising revenue amounts to 7,500,000. What amortisation charge should be recognised for the first year?Single choiceL4
- The Ondelia platform acquires the streaming rights to a film catalogue for 10 years. Subscriptions are sold at variable prices depending on promotions, and the share of revenue attributable to the catalogue fluctuates widely with no link to the use of the rights. The contract sets no revenue cap. Management proposes to amortise the rights in line with subscription revenue. What do you conclude?Single choiceL3
- Médisud acquires the exclusive right to distribute a medical device in three countries. The contract ends on the earlier of two dates: the day on which cumulative sales of the device reach 50,000,000, or after 8 years. According to the business plan, the sales threshold would be reached in 4 to 5 years. The finance director wants to amortise the right in proportion to sales; the auditor points to the presumption against revenue-based methods. Write a judgement memo on the amortisation method.JudgmentL4
Residual value11 questions
- In which situation may an entity use a non-zero residual value for an intangible asset with a finite useful life?Single choiceL2
- True or false? A mutual insurer has had bespoke claims management software developed. It estimates that it could resell it for 20% of its cost at the end of its use, although no buyer has made any commitment and there is no active market for this type of software. It may use this residual value.True / falseL2
- True or false? Vinéa holds a manufacturing licence that it will use for 5 years. A distributor has contractually committed to buy this licence back for 50,000 at the end of those 5 years. Vinéa may use a residual value of 50,000 to calculate the depreciable amount.True / falseL2
- A services group holds the following intangible assets with a finite useful life. For which one may it use a non-zero residual value?Single choiceL2
- A testing laboratory acquires a licence to use a screening method for … and will operate it for … years. A peer laboratory has contractually committed to buy the licence back for … at the end of that period. The straight-line method is used. Calculate the depreciable amount and the annual charge.CalculationL2Variant
- The Marée Haute fishing company acquires a transferable fishing quota for … and will use it for … years. These quotas are traded on an active market, by reference to which the residual value at the end of use is determined at …; that market will probably still exist at the end of the quota's use. The quota is available for use on 1 October 20X1, that is … months before the year-end of 31 December 20X1. The straight-line method is used. Calculate the depreciable amount and the charge for 20X1.CalculationL3Variant
- A travel agency acquires an online booking platform for … and will use it for … years, on a straight-line basis. Its director believes it could be resold for … at the end of that period, but no buyer has made any commitment and there is no active market for this type of asset. What is the annual amortisation charge?CalculationL2
- On 1 January 20X1, Tissavel acquires a right to use a patented textile pattern for 1,000,000 and will exploit it for 4 years. A competing manufacturer has contractually committed to buy this right back for 200,000 at the end of the 4 years. The entity applies the cost model and the straight-line method. What is the carrying amount of the right at 31 December 20X2?Single choiceL3
- True or false? Once set at initial recognition, the residual value of an intangible asset with a finite useful life can no longer be changed, so as to preserve the consistency of the amortisation plan.True / falseL2
- Sylvarène amortises a broadcasting licence that a third party has contractually committed to buy back from it at the end of its useful life. At 1 January 20X4, the carrying amount of the licence is … and its remaining useful life is … years. On that date, the buy-back commitment is renegotiated and the revised residual value is …. No other event affects the licence in 20X4. Calculate the amortisation charge for 20X4 and the carrying amount of the licence at 31 December 20X4.CalculationL3
- Corbanne acquired for … an operating right amortised on a straight-line basis over … years. As a third party has committed to buy back the right at the end of that period, Corbanne used a residual value of …. After … years of amortisation, the buy-back commitment is renegotiated and the residual value is reduced to …; the total useful life and the amortisation method are unchanged. Calculate the carrying amount of the right at the date of the revision and the new annual amortisation charge.CalculationL2
Annual review of amortisation period and method8 questions
- A technology acquired for … is amortised on a straight-line basis over …, with no residual value. After … of amortisation, the year-end review shows that a competitor will make the technology obsolete: the remaining useful life is now only …. The impairment test performed under IAS 36 as a result of this indication shows no impairment loss. What is the charge for the year following the revision?CalculationL3
- During the annual review, a carrier finds that the useful life of its parcel tracking software will be longer than expected. How is this change accounted for?Single choiceL2
- How often, at a minimum, must an entity review the amortisation period and method of an intangible asset with a finite useful life?Single choiceL2
- A patent acquired for … is amortised on a straight-line basis over … years, with no residual value. After … years of amortisation, the year-end review shows that the technology will remain usable for longer than expected: the remaining useful life is now … years. Calculate the carrying amount at the time of the revision and the revised annual charge.CalculationL2Variant
- A music label acquired the exploitation rights to a catalogue of recordings for …, amortised on a straight-line basis over … years with no residual value. After … years of amortisation, the catalogue's lasting success in digital streaming leads to an increase of its total useful life, since acquisition, to … years. What is the annual charge for the following years?CalculationL3Variant
- A bicycle manufacturer amortises, on a straight-line basis over … years with no residual value, a right to use a welding process acquired for …. After … years, the year-end review shows that the benefits are in fact consumed as frames are welded, which can now be measured reliably: … frames remain to be produced with this process. The units of production method is adopted from year 3, during which … frames are welded. What is the charge for year 3?CalculationL3Variant
- A market research company amortises a consumer database acquired for … using a units-based method, according to the number of queries. At the start of the year, accumulated amortisation amounts to …. The previous year-end review showed that use of the database is no longer linked to the number of queries and that the pattern of consumption can no longer be determined reliably; the remaining useful life is … years, with no residual value. What is the charge for the year?CalculationL3Variant
- On 1 January 20X1, Cartéo acquired mapping software for 300,000, amortised on a straight-line basis over 6 years with no residual value. At the year-end review at 31 December 20X2, after recognising the 20X2 charge, management concludes that a change in technical standards will make the software unusable at the end of 20X4: the remaining useful life is now only 2 years. The finance director proposes to restate 20X1 and 20X2 over a total life of 4 years. Which treatment should be adopted?Single choiceL3
Indefinite useful life: no amortisation, annual testing12 questions
- An entity concludes that an acquired brand has an indefinite useful life. What treatment then applies to the brand?Single choiceL2
- A food group holds an acquired brand, recognised for several years with an indefinite useful life. A new health regulation will ban, in four years, the sale of the products marketed under this brand, and no repositioning is planned. The head of consolidation believes it is enough to continue the annual impairment test. Write a judgement memo on the treatment of the brand at the year-end.JudgmentL4
- True or false? The Saveurs d'Antan group holds an acquired brand with an indefinite useful life. Last year's impairment test showed a wide margin between recoverable amount and carrying amount, and no indication of impairment has arisen this year. The group may skip testing the brand at this year-end.True / falseL2
- True or false? When an entity concluded on initial recognition that a licence has an indefinite useful life, that assessment no longer needs to be reconsidered afterwards, unless the licence is sold.True / falseL2
- A hotel group holds the following intangible assets. Which one must not be amortised?Single choiceL2
- At the year-end, a press publisher concludes that the magazine title it had acquired, previously regarded as having an indefinite useful life, now has a useful life of only 6 years. Which of the following consequences are correct?Multiple choiceL3
- An acquired cosmetics brand, never amortised because its useful life was judged indefinite, has a carrying amount of … at 31 December 20X3. At that date, new regulations on certain ingredients lead management to set its remaining useful life at … years, with no residual value. The test performed under IAS 36 gives a recoverable amount of …. Calculate the impairment loss to be recognised at 31 December 20X3 and the annual charge from 20X4.CalculationL3Variant
- The regional radio station Onde Claire holds a broadcasting authorisation that has so far been renewed without difficulty and is therefore not amortised. At the end of 20X5, the regulator announces that frequencies will be reallocated by tender in … years: the authorisation will end at that date, with no residual value. Its carrying amount is …; the appointed valuer has determined under IAS 36 a recoverable amount of …. What impairment loss should be recognised at the end of 20X5, and what annual charge should be used thereafter?CalculationL3Variant
- On 1 January 20X1, a dairy cooperative acquires a cheese brand for …; the brand's useful life is judged indefinite. The seller had amortised it over … years. The cooperative applies the cost model. After … years, the annual impairment tests under IAS 36 have all shown a recoverable amount above the carrying amount. What are the accumulated amortisation and the carrying amount of the brand at 31 December 20X3?CalculationL2
- The Brindor group holds a trade name acquired for a range of biscuits, with a carrying amount of 600,000, not amortised because its useful life was judged indefinite. In December 20X4, the board decides to discontinue the range and stop using the name in 3 years, with no residual value. The test under IAS 36 shows a recoverable amount of 650,000. Which treatment should be adopted?Single choiceL4
- Aquilon performs the impairment test of a distribution licence with an indefinite useful life every November. In June 20X2, its main customer, which accounts for most of the sales made under the licence, terminates its contract, which is an indication of impairment. The controller proposes to wait for the November test. What should be done?Single choiceL2
- The Fraîcheur des Cimes group holds a soft drinks brand acquired eight years ago and recognised with an indefinite useful life. During the year, its sales fell by 30% as tastes shifted towards sugar-free drinks. Management is preparing a new recipe and a relaunch plan, not yet funded, and claims that nothing changes since the annual test will be carried out as usual. Write a judgement memo on the treatment of the brand at the year-end.JudgmentL4
Impairment losses: linkage to IAS 3612 questions
- An entity suspects that an operating licence has lost value. Which standard does it apply to determine whether the licence is impaired?Single choiceL2
- An engineering company wants to know whether its structural calculation software, amortised under the cost model, is impaired. Which approach does it follow?Single choiceL2
- The finance director of a toy manufacturer argues that a patent amortised over its finite useful life never needs to be considered for impairment, since amortisation is enough to reflect its loss in value. What should he be told?Single choiceL2
- A licence to manufacture a generic medicine, acquired for … and measured under the cost model, has accumulated amortisation of … at the year-end. As a competitor has launched a cheaper product, the entity performs a test under IAS 36, which results in a recoverable amount of …. Under IAS 36, when the recoverable amount is lower than the carrying amount, the difference is recognised as an impairment loss in profit or loss. Calculate the carrying amount before the test and the impairment loss.CalculationL2Variant
- An online bank measures its internally developed payment platform at cost; the platform cost … and has been amortised by … to date. Following a major outage of the platform, the bank performs a test under IAS 36: the recoverable amount determined is …. Under IAS 36, when the recoverable amount is lower than the carrying amount, the difference is recognised as an impairment loss in profit or loss. What is the carrying amount before the test and what impairment loss must be recognised?CalculationL2Variant
- A sports club holds rights to exploit the image of its stadium, acquired for … and measured under the cost model. At the year-end, accumulated amortisation stands at … and an impairment loss of … was already recognised two years ago. The team's relegation leads to a new test under IAS 36, which gives a recoverable amount of …. Under IAS 36, when the recoverable amount is lower than the carrying amount, the difference is recognised as an impairment loss in profit or loss. Calculate the new impairment loss and the carrying amount after the test.CalculationL3Variant
- A solar panel manufacturer acquired a patent on an anti-reflective coating for …, amortised on a straight-line basis over … years with no residual value. After … years of amortisation, the emergence of a more efficient competing technology leads to a test under IAS 36, which shows a recoverable amount of …. No impairment loss has been recognised so far. Under IAS 36, when the recoverable amount is lower than the carrying amount, the difference is recognised as an impairment loss in profit or loss. Calculate the carrying amount before the test and the impairment loss.CalculationL3Variant
- An advertising agency holds an acquired customer list, measured under the cost model, with a carrying amount of …. The departure of several major advertisers leads to a test under IAS 36, which gives a recoverable amount of …. Under IAS 36, when the recoverable amount is lower than the carrying amount, the difference is recognised as an impairment loss in profit or loss. The entity uses an accumulated impairment account. Record the year-end entry.Journal entryL2Variant
- A school publisher acquired a licence to adapt a reading method for …, measured under the cost model; accumulated amortisation amounts to …. A reform of the school curriculum reduces the appeal of the method: the test performed under IAS 36 results in a recoverable amount of …. Under IAS 36, when the recoverable amount is lower than the carrying amount, the difference is recognised as an impairment loss in profit or loss. Which entry should be recorded at the year-end?Journal entryL3Variant
- A ferry company amortises on a straight-line basis over … years, with no residual value, a ticketing system acquired for … and measured under the cost model. At the start of the year, accumulated amortisation amounts to …. At the year-end, following the loss of a sea route, a test under IAS 36 gives a recoverable amount of …. Under IAS 36, when the recoverable amount is lower than the carrying amount, the difference is recognised as an impairment loss in profit or loss. Record the charge for the year, then the impairment entry.Journal entryL3
- Hélicéa holds a patent on a wind turbine blade, with a carrying amount of 300,000 and a cost of 320,000. After a failed tender, the test performed under IAS 36 gives a recoverable amount of 260,000. Out of prudence, the chief executive wants to write the patent down to 200,000. Under IAS 36, the impairment loss is the excess of the carrying amount over the recoverable amount. What impairment loss should be recognised?Single choiceL3
- Nautéo's year-end file contains, for navigation software with a carrying amount of 500,000: a report prepared under IAS 36 setting the recoverable amount at 430,000, and an estimate by the insurer, prepared to set the insurance premium, of 380,000. Under IAS 36, the impairment loss is the excess of the carrying amount over the recoverable amount. What impairment loss should be recognised?Single choiceL2
Derecognition triggers8 questions
- Which of these events lead to the derecognition of an intangible asset?Multiple choiceL2
- True or false? An intangible asset is derecognised when the entity sells it to a third party.True / falseL1
- True or false? As long as no sale has taken place, an intangible asset remains recognised, even if the entity no longer expects any future economic benefits from either its use or its disposal.True / falseL1
- True or false? A fully amortised payroll software that the entity still uses every month to produce payslips must be derecognised because its carrying amount is nil.True / falseL2
- Which two events lead to the derecognition of an intangible asset under IAS 38?Single choiceL1
- Valtrion holds a patent on a surface-treatment process. A new regulation permanently bans the process: Valtrion stops using it, no buyer or licensee is conceivable and no other benefit is expected from the patent. What should Valtrion do?Single choiceL2
- The Orbelline group has stopped selling products under a brand acquired a few years ago. The brand is no longer used, but a competitor has made a firm offer to buy it next quarter, and Orbelline intends to accept it. At the year-end, the brand does not yet meet the criteria for classification as held for sale (IFRS 5). How is the brand treated at the year-end?Single choiceL2
- At the year-end, Duremont reviews five intangible assets. Which ones must it derecognise?Multiple choiceL2
Gain or loss on derecognition14 questions
- An entity sells a portfolio of brand licensing rights, acquired for … and amortised by … at the date of sale. The selling price is … and the entity bears … of legal fees related to the sale. What gain on disposal is recognised in profit or loss?CalculationL3
- An entity sells for cash, for …, a business software asset acquired for … and amortised by … at the date of sale. No costs of disposal are incurred. Record the derecognition entry.Journal entryL3
- How is the gain or loss arising from the derecognition of an intangible asset determined and recognised?Single choiceL2
- Kerlune sells a distribution licence acquired for … and amortised by … at the date of sale. The agreed price is … and Kerlune pays … of broker fees to complete the sale. Calculate the carrying amount of the licence at the date of sale and the result on disposal.CalculationL2Variant
- The Sarvanel group, which applies the cost model, sells to a competitor a portfolio of subscriber contracts acquired for …. At the date of disposal, accumulated amortisation amounts to … and accumulated impairment losses to …. The selling price is …; legal costs directly related to the disposal amount to …. Calculate the carrying amount at the date of disposal and the result on disposal.CalculationL3Variant
- Brenoval acquired planning software on 1 January 20X1 for …, available for use on that date and amortised on a straight-line basis over … years, with no residual value. It sells the software on 30 September 20X3 for …, with no costs of disposal and without prior classification as held for sale (IFRS 5). Its reporting date is 31 December. Calculate the carrying amount at the date of disposal and the result on disposal.CalculationL3Variant
- The professional sports club Tormelis obtained an image broadcasting right on 1 January 20X2 for …, usable immediately and amortised on a straight-line basis over … years, with no residual value. On 30 June 20X4, it resells this right to a television channel for … and bears … of deed costs, without prior classification as held for sale (IFRS 5). Its financial year is the calendar year. Determine the carrying amount of the right on the day of the resale and the result arising.CalculationL3Variant
- Halvérine sells on credit, for … payable within 60 days, a licence to exploit culinary recipes acquired for … and amortised by … at the date of disposal. No costs are incurred. Record the derecognition entry.Journal entryL2Variant
- The Quintéra laboratory, which applies the cost model, sells for cash, for …, a marketing authorisation dossier acquired for …. At the date of sale, the asset carries … of accumulated amortisation and … of accumulated impairment losses. No costs of disposal are incurred. The sales director wants to present the price in revenue. Record the derecognition entry.Journal entryL3Variant
- The Ambrelys cooperative holds an online booking website developed by a contractor, recognised at … and amortised by …. After the related activity is permanently closed, the website is taken offline; it will neither be reused nor sold and no disposal proceeds are expected. Record the resulting entry at the year-end.Journal entryL3Variant
- The Fenwald group, a sporting goods distributor, sells a secondary brand acquired for 300,000 and amortised by 120,000 at the date of sale. The price is 230,000; an investment bank charges 6,000 for the transaction. The chief executive points out that Fenwald regularly sells brands and proposes to include the selling price in revenue. Which treatment should be adopted?Single choiceL3
- Myrcane sells a patent with a carrying amount of 60,000 at the date of disposal. The buyer pays 52,000 and Myrcane pays 3,000 of patent attorney fees directly related to the disposal. What result does Myrcane recognise?Single choiceL2
- Brévalis sells a brand to a competitor. The contract is signed on 15 November 20X1; according to the analysis performed under IFRS 15, the buyer obtains control of the brand on 10 January 20X2, the date on which the rights are actually transferred. The price is received on 28 February 20X2. Brévalis has a reporting date of 31 December 20X1 and the brand has not been classified as held for sale. On which date is the brand derecognised?Single choiceL2
- Lorvane sells a patent whose carrying amount is … at the date control passes to the buyer. The price of … is payable … months after that date, with no costs of disposal. According to the analysis performed under IFRS 15, this payment term is a significant financing component, and the appropriate discount rate is …% a year (discounting over a single period); Lorvane does not apply the IFRS 15 practical expedient for terms of one year or less. The patent has never been classified as held for sale. Calculate the consideration included in the result on disposal and the gain on disposal.CalculationL3
Amortisation of unused assets8 questions
- True or false? An entity that temporarily stops using a licence with a finite useful life suspends its amortisation until use resumes.True / falseL2
- True or false? A software platform with a finite useful life, amortised on a straight-line basis, withdrawn from operations while management decides on its future, continues to be amortised.True / falseL2
- True or false? A licence with a finite useful life, unused and already fully amortised, continues to generate an amortisation charge as long as it appears in the entity's records.True / falseL2
- True or false? An intangible asset with a finite useful life, unused and classified as held for sale, continues to be amortised until it is actually sold.True / falseL2
- Pellardi holds several intangible assets with finite useful lives that are amortised on a straight-line basis and not yet fully amortised. In which of these situations does amortisation of the asset cease?Single choiceL2
- Corvenne acquired a licence for training content for 60,000, amortised on a straight-line basis over 10 years with no residual value. In 20X3, for lack of trainers, the licence is not used at all; it is not classified as held for sale and will be used again in 20X4. What amortisation charge does Corvenne recognise for 20X3?Single choiceL2
- A management controller asks why amortisation of a finite-life licence, amortised on a straight-line basis, continues although it remained unused for the whole year. Which answer is consistent with IAS 38?Single choiceL2
- Lisandre has stopped using a finite-life manufacturing patent after a production line was shut down. It is negotiating to license the patent to a foreign manufacturer from next year. The patent is not classified as held for sale. Which treatment should be adopted at the year-end?Single choiceL2
Information by class of intangible assets10 questions
- Which of the following does an entity disclose for each class of intangible assets, distinguishing internally generated assets from others?Multiple choiceL2
- For each class of intangible assets, IAS 38 requires the information to be presented by distinguishing two subsets of assets. Which ones?Single choiceL2
- Nérolys presents a Software class made up of assets with finite useful lives. Which information on the amortisation of this class must appear in the notes?Single choiceL2
- The Altabrin group presents its expenses by function (cost of sales, selling expenses, administrative expenses). Amortisation of its intangible assets is spread across several of these lines. Which information must it give on this point for each class?Single choiceL3
- Velmorat is preparing the note on its Operating licences class, made up of finite-life assets measured under the cost model. Which of these items must it include?Multiple choiceL2
- You are reviewing the disclosure checklist for the intangible asset notes of the Tessarine group. Which of these presentation choices comply with IAS 38?Multiple choiceL3
- The Rights and brands class of the Ostrévie group includes brands assessed as having indefinite useful lives and operating rights with finite lives. How must the note for this class deal with useful lives?Single choiceL3
- In the Vérandel group's note, the Technologies class combines in a single column capitalised development costs from internal projects and patents bought from third parties. Lives, methods, gross carrying amounts and the reconciliation are given for this single column. What is the main shortcoming under IAS 38?Single choiceL3
- Altamir is preparing the note on its intangible assets, all measured using the cost model. In addition to the reconciliation of carrying amounts by class, which information does IAS 38 require it to disclose when the corresponding situations exist?Multiple choiceL2
- Maurévin has pledged a transport licence, recognised at a carrying amount of 450,000, as security for a bank loan. It continues to operate the licence. What information does IAS 38 require for this licence?Single choiceL2
Reconciliation of carrying amount8 questions
- An entity prepares the reconciliation between the opening and closing carrying amounts of a class of intangible assets. Which of these items appears in it?Single choiceL2
- Which of these items is NOT a movement in the reconciliation between the opening and closing carrying amounts of a class of intangible assets?Single choiceL2
- During the year, Brévaline sold for 55,000 a licence whose carrying amount was 40,000 at the date of sale, giving a gain of 15,000. Which amount must appear on the disposals line in the reconciliation of carrying amounts of the Licences class?Single choiceL3
- Dorvane's Software class has an opening carrying amount of …. During the year: additions of …, amortisation of …, impairment losses of … and disposals at a carrying amount of …. What closing carrying amount must be shown in the reconciliation?CalculationL2Variant
- The international Calvérac group is preparing the reconciliation for its Technologies class. Opening carrying amount: …. Movements for the year: separate acquisitions …, capitalised internal development …, additions through business combinations …, assets classified as held for sale …, amortisation …, impairment losses …, reversals of impairment losses … and positive net exchange differences …. Calculate the closing carrying amount.CalculationL3Variant
- Pirmond's intern prepared the reconciliation for the Patents class but forgot the line for amortisation for the period. Data: opening carrying amount …, additions …, disposals at a carrying amount of …, closing carrying amount per the trial balance …. No other movement occurred. Which amortisation amount must appear in the reconciliation?CalculationL3Variant
- For its Brands and licences class, the Brazilian subsidiary of the Ystrane group reports an opening carrying amount of … and a closing carrying amount of …. The known movements are amortisation of …, impairment losses of … and negative net exchange differences of …. There were no disposals and no revaluations. Which amount of additions must be shown for the reconciliation to balance?CalculationL3Variant
- Faulmère applies the revaluation model to its Transferable taxi licences class. During the year, the carrying amount of the class increased by 30,000 as a result of a revaluation recognised in other comprehensive income. How is this movement dealt with in the reconciliation of carrying amounts?Single choiceL3
Disclosure of indefinite-life assets8 questions
- A group reports a brand with an indefinite useful life. In addition to the general information by class, what must it disclose in the notes about this brand?Single choiceL3
- The Ravenhal group's draft note states, for an acquired recipe catalogue assessed as having an indefinite useful life: carrying amount of 1,400,000; asset not amortised. What is missing under IAS 38?Single choiceL3
- Mirabeau Thermal is drafting the justification for the indefinite useful life of an acquired mineral water brand. Which item is relevant to describe as a significant factor in the note?Single choiceL3
- Hélvarn's audit committee reviews four proposed wordings to justify, in the notes, the indefinite useful life of an acquired newspaper title. Which one is acceptable?Single choiceL3
- The Sorvelle group, which applies the cost model, holds an indefinite-life brand acquired for 900,000. An impairment loss of 150,000 was recognised two years ago, with no reversal since. The controller proposes to disclose the carrying amount after deducting notional amortisation of 90,000. Which carrying amount must be disclosed for this brand?Single choiceL3
- Six years ago, the Cassévane group acquired a brand of artisan jams that has been on its market for more than a century. The market is stable, the brand is supported by an annual advertising budget that the group is committed to maintaining, no technical obsolescence is conceivable and the brand is protected by a renewable registration. Management has concluded that the useful life is indefinite. Carrying amount at the reporting date: 2,600,000. Draft the paragraph of the notes dealing with this brand.JudgmentL3
- You are reviewing Pontavel's draft notes. For an acquired magazine title, the paragraph is limited to the following sentence: in accordance with group policy, press titles have an indefinite useful life and are not amortised. No amount is given. Write your review comments for the finance department.JudgmentL3
- The finance director of the Lamberge group, which holds two acquired brands with indefinite useful lives (a cosmetics brand with a carrying amount of 3,100,000 and a tools brand with a carrying amount of 1,700,000), considers detailed disclosures on these brands unnecessary since they generate no amortisation charge. Write a reasoned memo replying to him and specifying the information to be disclosed.JudgmentL3
Research and development expenditure recognised as an expense9 questions
- What does IAS 38 require entities to disclose about research and development expenditure that is not capitalised?Single choiceL2
- During the year, Ombrevalle incurred … of research expenditure on new materials, … of development expenditure on a sensor before all the capitalisation criteria were demonstrated, then … of development expenditure capitalised once the criteria were met. It also incurred … of advertising for the sensor launch. What amount of research and development expenditure recognised as an expense must it disclose?CalculationL2Variant
- In 20X2, the video game publisher Kalmira carried out an exploratory study of graphics engines for …. It then developed a new game: … was incurred from January to April, before all the criteria were demonstrated on 1 May, and … was capitalised from May to December. Finally, training the support teams for the new game cost …. What amount of research and development expenditure recognised as an expense in 20X2 must be disclosed?CalculationL2Variant
- Tarvelle carried out three internal projects. For project A, it could not distinguish the research phase from the development phase; expenditure amounts to …. Project B, a basic research project, cost …. Project C has met all the development criteria since the start of the year; its expenditure of … was capitalised. What amount of R&D recognised as an expense must be disclosed?CalculationL2Variant
- The technical centre of the Brunelles farming cooperative spent … testing yeast strains in the laboratory. Its harvest traceability tool, which meets the capitalisation criteria, gave rise to … of capitalised expenditure. A connected irrigation project cost …, and the cooperative cannot separate what relates to research from what relates to development. What total of R&D expensed does the cooperative mention in its notes?CalculationL2Variant
- Glendor capitalises all its development expenditure, which meets the criteria from the start of the projects, and expenses its research expenditure. Its finance director believes no disclosure of R&D expensed is necessary. Is he right?Single choiceL2
- Velcourt's draft notes mention 70,000 of research expenditure recognised as an expense. However, during the year, Velcourt also expensed 30,000 of development expenditure incurred before the capitalisation criteria were demonstrated, then capitalised 90,000 of development. Which amount must the notes disclose?Single choiceL2
- In 20X1, Ardoval expensed 50,000 of development expenditure on a medical device. In 20X2, it incurs 35,000 of research on another device and 20,000 of development on the medical device before the capitalisation criteria are demonstrated in March 20X2. Management proposes to reinstate the 50,000 of 20X1 as an asset. What amount of R&D recognised as an expense does Ardoval disclose for 20X2?Single choiceL2
- During 20X3, Ilvanor incurred the following expenditure: salaries of its laboratory researchers, …; materials consumed in research work, …; expenditure directly attributable to a development project incurred before the recognition criteria were met, …; general administrative overheads of the head office, not directly attributable to these activities, …; expenditure on the same project incurred after the criteria were met and recognised as an asset, …. What amount of research and development expenditure recognised as an expense should Ilvanor disclose for 20X3?CalculationL2