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Hi,
I’m unsure what the criteria for recognising intangible assets separately from goodwill on consolidation would be.
Would it follow the same criteria as recognising intangibles normally, and how should I judge whether this should be separate from goodwill?
Many thanks in advance.A question will tell you by name the intangible assets
“The entity also had a brand that was not recognised …”
“The entity owned a patent …”
“The entity had royalty receivable ….”
There’s really no problem about recognising an intangible in the F7 exam … the examiner spells it out for you
OK?
Ok, so in those examples I would recognise separately from goodwill?
The question I was originally stuck on was question 2 in the specimen paper, and it wasn’t immediately obvious to me why the answer was the research project.
Thank you.Research too is normally separately identifiable …
… but of course research s not an intangible asset!
Only development can be capitalised and then only if that development expenditure satisfies strict criteria
Ah, so because it is not an intangible asset, that is why it can be recognised separately in goodwill?
I think I need to get my head around the wording of the question and possible answers as that’s not how I read the question initially!
Thank you for your help.I would need to know the precise question before I could comment any further!
Ok, it was question 2 from the specimen exam paper:
When a parent is evaluating the assets of a potential subsidiary, certain intangible assets can be recognised separately from goodwill, even though they have not been recognised in the subsidiary’s own statement of financial position.
Which of the following is an example of an intangible asset of the subsidiary which may be recognised separately from goodwill when preparing consolidated financial statements?
A A new research project which the subsidiary has correctly expensed to profit or loss but the directors of the parent have reliably assessed to have a substantial fair value
B A global advertising campaign which was concluded in the previous financial year and from which benefits are expected to flow in the future
C A contingent asset of the subsidiary from which the parent believes a flow of future economic benefits is possible
D A customer list which the directors are unable to value reliably
And they have given the answer as A.
D – unreliable value
C – only possible benefits
B – completed last year and written off with only an expectation of a future flow of benefits
A – reliable assessment of substantial fair value so a valuable asset (even though correctly written off in previous years)
It has to be A
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