What are the rules for determining the amount of cost in each category of intangibles in...
What are the rules for determining the amount of cost in each category of intangibles in question 22 to be removed from the asset account during each accounting period?
Question 22 is
- What are the two categories of intangible assets for the purposes of disposing of their capitalized costs?
Homework Answers
Intangible Assets refers to those assets of organisation which are acquired or self-generated by the organisation. These assets are not in the business in form of monetary form like cash, investment and trade receivables etc. Even there is no physical substance of intangible assets in the business.
Intangible Assets will be recorded in financial statement if the asset is separable and have market to transfer, license or rented etc in the open market and it is acquired by way of contractual or legal agreement. Therefore, self-generated intangible are not recorded in financial statements. These assets are treated as capital assets therefore all the provision regarding recognition, measurement, impairment, disclosure will also be applicable like other capital assets.
Further, if Intangible Assets has a finite useful life then it will be amortized over the useful life and if there is no finite life then it will be subjected to impairment based on the fair value of Intangible Assets. Intangible assets initially recognized at their fair values and any further cost of improvement will be capitalized in financial statements like Goodwill, Patents, Trademark, and Copyright etc. These assets are initially recognized at the fair value, improvement will be added, and then any impairment will also be considered accordingly.
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What are the rules for determining the amount of cost in each
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