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Which of the following is correct regarding accounting for patent costs?
Most costs incurred to generate a patent internally will be expenses; however, legal costs to defend an existing patent will be capitalized if the legal proceedings are successful. When an existing patent is purchased from another party, that cost is capitalized.
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Which of the following is correct regarding costs associated with goodwill?
Costs to develop and maintain goodwill be expensed, not capitalized. Goodwill itself is capitalized but not amortized.
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Pop Co purchases a patent in Year 1 from another organization at the cost of $100,000. In Year 3, Pop Co defended its patent in a law suit, during which it spent $20,000 in legal fees. Pop Co was successful in defending the patent. The entry to record the $20,000 in legal fees should include which of the following?
Costs incurred to defend a patent will be capitalized if the lawsuit is successful. Therefore, the entry to record these costs will include a debit to an intangible asset.
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Under IFRS rules, which of the following statements about intangible assets is correct?
Internally generated goodwill cannot be capitalized and is treated as an expense in the period incurred.
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Are routine efforts to improve an existing product considered R&D expenses?
Routine expenses to maintain a product that already exists could not be R&D as the product is technologically feasible.
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A long lived asset should be tested for recoverability:
Carrying amounts of fixed long term assets should be tested for recoverability no less than annually or when circumstances indicate a possible permanent change in carrying amount.
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