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Q.when a parent is evaluating the assets of the potential subsidiary,certain Intangible assets can be recognized separately from goodwill,even though they have not been recognized 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 recognized 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.Correct Answer is A
Can you please explain why option b , c and d can not be answer ?Hi,
We can capitalise the asset separately if we can measure its fair value. So, it states in A that they have reliably assessed the fair value, hence it would capitalised separately.
For D, there is no value that can be measure reliably so would not be capitalised separately.
For C, there is only a possible benefit so we would not recognise this unless it was probable and had a fair value.
For B, benefits are expected to flow but we don’t know the value of these benefits so could not capitalise separately.
Thanks
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