Question

In the following TBS, you are to complete various tasks related to accounting for intangible assets. All information necessary to do your work is provided.

Metro Co. lists several items in the spreadsheet below. In the second column indicate whether the item is an intangible asset and how it is classified by clicking on the related cell in that column and selecting from the options provided in the popup list. In the third column indicate the appropriate capitalization of related expenditures for the item. In the fourth column, select the appropriate choice for amortization. In the last column select the appropriate choice for recognizing impairment losses. Each solution choice from the options popup lists may be used once, more than once, or not at all.

Metro Co. lists several items in the spreadsheet below. In the second column indicate whether the item is an intangible asset and how it is classified by clicking on the related cell in that column and selecting from the options provided in the popup list. In the third column indicate the appropriate capitalization of related expenditures for the item. In the fourth column, select the appropriate choice for amortization. In the last column select the appropriate choice for recognizing impairment losses. Each solution choice from the options popup lists may be used once, more than once, or not at all. Item Classification Capitalization Amortization Impairment Trademark Customer list O Copyright Franchise (initial fee) O O OOO O O Software development O Research and development Patent : Goodwill

Cell popup options

Classification:

Definite life intangible

Definite or indefinite life intangible

Indefinite life intangible

Not an intangible

Part definite life intangible, part not intangible

Capitalization:

No expenditures

Only expenditures made to external parties

Only expenditures beyond technological feasibility

Amortization:

Amortize

Amortize expenditures beyond technological feasibility

Depends on whether definite or indefinite life

Do not amortize

Impairment:

Depends on whether definite or indefinite life

Fair value test

Net realizable value test for capitalized amount

Not subject to impairment

Recoverable cost test

Answer 1

Metro Co.
Item	Classification	Capitalization	Amortization	Impairment
Trademark	Definite life Intangible	Only expenditures made to external parties	Amortize	Not subject to impairment
Customers list	Definite or indefinite life Intangible	Only expenditures made to external parties	Depends on whether definite or indefinite life	Depends on whether definite or indefinite life
Copyright	Definite life Intangible	Only expenditures made to external parties	Amortize	Not subject to impairment
Franchise(Initial Fee)	Definite life Intangible	Only expenditures made to external parties	Amortize	Not subject to impairment
Software development	Part definite life intangible, part not intangible	Only expenditures beyond technical feasibility	Amortize expenditures beyond technological feasibility	Depends on whether definite or indefinite life
Research and development	Not an Intangible	No Expenditures	Do not amortize	Not subject to impairment
Patent	Definite life Intangible	Only expenditures made to external parties	Amortize	Not subject to impairment
Goodwill	Indefinite life intangible	Only expenditures made to external parties	Do not amortize	Fair value test