4.1 IAS 38 IA - Recognition & Amortisation

What is the main objective of IAS 38 IA - Recognition & Amortisation?

• To set rules for deciding when a company can count something as an intangible asset.

• To say how companies should figure out the value of tangible assets.

• To regulate the number of employees in a company.

• To determine the physical location of intangible assets.

How can an intangible asset be identified?

• By its weight and size.

• By its smell and taste.

• By its color and shape.

• By being distinguishable from goodwill.

What is required for an intangible asset to be recognized?

• The company must have control over it because of future events.

• It should bring past economic benefits to the company.

• The company must have control over it because of past events.

• It should bring future economic benefits to the company.

What is amortization in accounting?

• The process of reducing the cost of an intangible asset to zero.

• The process of increasing the cost of an intangible asset over time.

• The process of spreading out the cost of an intangible asset over its useful life.

• The process of doubling the cost of an intangible asset.

Why is internally generated goodwill not recognized as an asset under IAS 38?

• Because it is easy to measure the cost of internally developed goodwill.

• Because it is legally prohibited.

• Because it is difficult to measure the cost of internally developed goodwill.

• Because it is not valuable to the company.

What is the importance of control by the entity for an intangible asset to be recognized?

• It ensures that the asset is insured.

• It allows the company to benefit from the asset in the future and prevent others from using it.

• It ensures that the asset is physically present in the company's premises.

• It guarantees that the asset will be sold at a profit.

How are expected future economic benefits related to intangible assets?

• They are necessary for an asset to be recognized as intangible.

• They are not important for financial records.

• They have no relation to intangible assets.

• They are only considered for tangible assets.

What happens when a company swaps one intangible asset for another?

• They discard both assets.

• They never swap intangible assets.

• They stick with the old asset's cost if the swap doesn't change anything important.

• They always use the fair value of the new asset.

How is the cost of an intangible asset spread out over its useful life?

• By dividing the total cost by the estimated useful life.

• By expensing the entire cost right away.

• By reducing the cost each year.

• By doubling the cost each year.

What is the definition of an intangible asset?

• Something that is legally prohibited.

• Something that is intangible but not valuable.

• Something valuable a company owns that you can't see or touch.

• Something that is physically present in the company's premises.