Question: Where can authoritative IFRS guidance related to intangible assets be found?
IAS 38 and IAS 36.
IFRS refers to a collection of globally agreed accounting and financial reporting rules for the preparation and presentation of financial statements. Ensures that accounting practices are consistent, resulting in comparable financial records among various reporting substances around the world.
IAS 38, "Intangible Assets," contains IFRS guidance for intangible assets. IAS 36, "Impairment of Assets," is an IFRS that deals with impairments.
"International Financial Reporting Standard No: 16, IASB" is the authorized advice for accounting for leases under International Financial Reporting Standards (IFRS) in the 'leases' category.
Question: (Recording and Amortization of Intangibles) Marshall Company, organized in 2016, has set up a single account for all intangible assets. The following summary discloses the debit entries that have been recorded during 2017.
Purchased patent (8-year life)
Purchase goodwill (indefinite life)
Purchased franchise with 10-year life; expiration date 7/1/27
Payment of copyright (5-year life)
Research and development costs
Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts for distinct types of intangibles. Make the entries as of December 31, 2017, recording any necessary amortization and reflecting all balances accurately as of that date. (Use straight-line amortization.)
On July 1, 2017, Wheeler Company purchased $4,000,000 of Duggan Company’s 8% bonds, due on July 1, 2024. The bonds, which pay interest semiannually on January 1 and July 1, were purchased for $3,500,000 to yield 10%. Determine the amount of interest revenue Wheeler should report on its income statement for the
year ended December 31, 2017.
Question: (Accounting for Research and Development Costs) Cuevas Co. is in the process of developing a revolutionary new product. A new division of the company was formed to develop, manufacture, and market this new product. As of year-end (December 31, 2017), the new product has not been manufactured for resale. However, a prototype unit was built and is in operation.
Throughout 2017, the new division incurred certain costs. These costs include design and engineering studies, prototype manufacturing costs, administrative expenses (including salaries of administrative personnel), and market research costs. In addition, approximately $900,000 in equipment (with an estimated useful life of 10 years) was purchased for use in developing and manufacturing the new product. Approximately $315,000 of this equipment was built specifically for the design development of the new product. The remaining $585,000 of equipment was used to manufacture the pre-production prototype and will be used to manufacture the new product once it is in commercial production.
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