IAS 38 provides guidance on accounting for intangible assets. Paragraph 21 states: 21 An intangible asset...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
IAS 38 provides guidance on accounting for intangible assets. Paragraph 21 states: 21 An intangible asset shall be recognized if, and only if: (a) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and (b) the cost of the asset can be measured reliably. a) Many have suggested that these criteria for recognizing an intangible asset are too restrictive. Suggest two other ways that companies might value intangible assets and explain how your suggested approach might be useful to current or potential investors of a company. Be specific in with your suggested measurement method/recognition criteria. It may be helpful to provide examples of intangible assets in your response to this question. (6 marks) b) Using explicit course concepts, why would standard setters have chosen to utilize the recognition criteria from IAS 38.21 rather than some other criteria (i.e., your suggestions from a)? (2 marks) c) Assuming semi-strong market efficiency, discuss why changing the accounting for intangible assets might have no impact on the price of a company's shares. In other words, despite multiple opinions about how to account for intangible assets, why might the accounting method chosen not matter for valuing a company? (2 marks) IAS 38 provides guidance on accounting for intangible assets. Paragraph 21 states: 21 An intangible asset shall be recognized if, and only if: (a) it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and (b) the cost of the asset can be measured reliably. a) Many have suggested that these criteria for recognizing an intangible asset are too restrictive. Suggest two other ways that companies might value intangible assets and explain how your suggested approach might be useful to current or potential investors of a company. Be specific in with your suggested measurement method/recognition criteria. It may be helpful to provide examples of intangible assets in your response to this question. (6 marks) b) Using explicit course concepts, why would standard setters have chosen to utilize the recognition criteria from IAS 38.21 rather than some other criteria (i.e., your suggestions from a)? (2 marks) c) Assuming semi-strong market efficiency, discuss why changing the accounting for intangible assets might have no impact on the price of a company's shares. In other words, despite multiple opinions about how to account for intangible assets, why might the accounting method chosen not matter for valuing a company? (2 marks)
Expert Answer:
Answer rating: 100% (QA)
a One way companies might value intangible assets is by using the replacement cost method Under this ... View the full answer
Related Book For
Financial Accounting Theory and Analysis Text and Cases
ISBN: 978-0470646281
10th edition
Authors: Richard G. Schroeder, Myrtle W. Clark, Jack M. Cathey
Posted Date:
Students also viewed these accounting questions
-
The FASB ASC provides guidance on accounting for best-efforts basis, research and development cost-sharing arrangements by federal government contractors. Find, cite, and copy that guidance.
-
The FASB ASC provides guidance on accounting for the use of zero coupon bonds in a troubled debt restructuring. Find, cite, and copy that guidance.
-
A bobcat cannot purr if and only if a panther does not have a long tail. Write the statement in symbolic form. Let p: A panther has a long tail. q: A bobcat can purr.
-
12. Bill thinks that welfare is needed in some cases. However, his friends in the Young Republicans taunt him every time he makes his views known. As a result, he accepts their views in order to...
-
Loren Satina is the sole owner of Clear View Park, a public camping ground near the Lake Mead National Recreation Area. Loren has compiled the following financial information as of December 31, 2017....
-
The logistic model represents the number of farm workers in the United States t years after 1910. (a) Evaluate and interpret W(0). (b) Use a graphing utility to graph W = W(t). (c) How many farm...
-
Let \(\mathbf{V}(t)\) be a linearly filtered complex-valued, wide-sense stationary random process with sample functions given by \[ \mathbf{v}(t)=\int_{-\infty}^{\infty} \mathbf{h}(t-\tau)...
-
Fortune provides a list of Americas largest corporations based on annual revenue. Shown below are the 50 largest corporations, with annual revenue expressed in billions of dollars (CNN Money website,...
-
Read the Testing the Nervous System case study . Answer each question and write a report for the case study. Which of the test results indicated a brain injury and why? Which of the test results...
-
Which series has the highest beta. BraveNewCoin Liquid Index for Bitcoin 1D BNC Trading Brave Ne Yellow Green Blue Orange
-
If you could travel at the speed of light, how long would it take to travel from one side of the Milky Way galaxy to the other?
-
A portfolio of stocks generates a 9% return in 2018, a 23% return in 2019, and a 17% return in 2020. What was the annualized return (geometric mean) for the entire period?
-
Refer to the facts in Problem 38 and assume the business car purchased is an SUV weighing 8,000 pounds. Compute the largest depreciation deduction possible in 2019. (Consider bonus depreciation and...
-
Using Internet resources, locate openings for at least three jobs, other than traditional public accounting positions, which require strong accounting and technology skills. Select one of these jobs,...
-
The price of the cheese that goes on top of a burger rose 18 percent during 2020. Did this higher price change the quantity of burgers supplied or the supply of burgers?
-
Indicate whether the following expenditures are trade or business deductions (T), production of income deductions (PI), personal deductions (P), or are not deductible (X). Also indicate if the...
-
Which of the following reformulations to mixed integer constraints is not correct? We can model indicator constraints, for a binary variable z, if z-1, then ax
-
7. FALSE DILEMMA 8. GANDWAGON Definition: Fallacy example: How to revise argument: Definition: Fallacy example: How to revise argument:
-
Qtip Corp. owns stock in Maxey Corp. The investment represents a 10 percent interest, and Qtip is unable to exercise significant influence over Maxey. The Maxey stock was purchased by Qtip on January...
-
The percentage of completion and completed contract methods are described in the FASB ASC. Search the codification to find the paragraphs covering these topics, cite them, and copy the results.
-
The FASB ASC gives an example of the accounting and reporting for a specific taxable temporary difference related to U.S. steamship entities that may be accounted for differently from the accounting...
-
You own your own firm, and you want to raise \($40\) million to fund an expansion. Currently, you own 100% of the firms equity, and the firm has no debt. To raise the \($40\) million solely through...
-
If investors are holding optimal portfolios, how will the portfolios of a more risk averse and a more risk-tolerant investor differ?
-
According to the managerial entrenchment theory, managers choose capital structures so as to preserve their control of the firm. On the one hand, debt is costly for managers because they risk losing...
Study smarter with the SolutionInn App