Question

Ivanhoe Electric Inc. has the following amounts included in its general ledger at December 31, 2017:

Organization costs		$35,000
Purchased trademarks		17,900
Development phase activities (meet all six development phase criteria)		31,300
Deposits with advertising agency for ads to promote goodwill of company		7,700
Excess of cost over fair value of identifiable net assets of acquired subsidiary		81,700
Cost of equipment acquired for research and development projects; the equipment has an alternative future use		125,200
Costs of researching a secret formula for a product that is expected to be marketed for at least 22 years		75,100
Payment for a favourable lease; lease term of 15 years		15,800

(a)

Based on the information, calculate the total amount for Ivanhoe to report as intangible assets on its statement of financial position at December 31, 2017. Assume Ivanhoe uses IFRS to prepare its financial statements.

Please note that adding the Purchased trademarks + Excess of cost over fair value of net assets of acquired subsidiary does not equal the correct answer.

Answer 1

Answers are in bold

Organization costs Cannot be added as this is a revenue expenditure		$35,000
Purchased trademarks to be added as trademarks are considered as intangible assets		17,900
Development phase activities (meet all six development phase criteria) not to be considered as this development is not sure of earning any revenue to the organization to be treated as capital asset in progress		31,300
Deposits with advertising agency for ads to promote goodwill of company to be considered as Deposits and is not related to intangible asset		7,700
Excess of cost over fair value of identifiable net assets of acquired subsidiary to be considered as goodwill and hence added for calculation of Intangible Assest		81,700
Cost of equipment acquired for research and development projects; the equipment has an alternative future use not a intangible asset as this is a cost of equipment		125,200
Costs of researching a secret formula for a product that is expected to be marketed for at least 22 years to be added as intangible asset		75,100
Payment for a favourable lease; lease term of 15 years this is debatable point according to my opinion, under the presumption that this amount is present value of future favorable benefit it should be classified as intangible asset		15,800

Therefore Intangible Asset amount=17900+81700+75100+15800=190500$