IFRS PRACTICAL IMPLEMENTATION GUIDE AND WORKBOOK

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Wiley IFRS: Practical Implementation Guide and Workbook

MULTIPLE-CHOICE QUESTIONS 1. A newly set up dot-com entity has engaged you as its financial advisor. The entity has recently com– pleted one of its highly publicized research and de– velopment projects and seeks your advice on the accuracy of the following statements made by one of its stakeholders. Which one is it? (a) Costs incurred during the "research phase" can be capitali zed. (b) Costs incurred during the "development phase" can be capitalized if criteria such as technical feasibility of the project being es– tablished are met. (c) Training costs of technician s used in re– search can be capitali zed. (d) Designing of jig s and tools qualify as re– search activitie s. Answer: (b) 2. Which item listed below does not qualify as an intangible asset? Answer: (d) 3. Which of the following items qualify as an intan– gible asset under lAS 38? (a) Advertisin g and promoti on on the launch of a huge product. (b) College tuition fees paid to employee s who decide to enroll in an executive M.B.A. pro– gram at Harvard University while working with the company. (c) Operating losses during the initial stages of the project. (d) Legal costs paid to intellectual propert y law– yers to register a patent. Answer: (d) 4. Once recognized, intangible assets can be carried at (a) Cost less accumulated depreciation . (b) Cost less accumulated depreciation and less accumulated amortization. (c) Revalued amount less accumulated de– preciation . (d) Cost plus a notional increase in fair value since the intangible asset is acquired. Answer: (b) 5. Which of the following disclosures is not required by lAS 38? (a) Useful lives of the intangible assets. (b) Reconciliation of carrying amount at the be– ginning and the end of the year. (c) Contractual commitments for the acquisition of intangible assets. (d) Fair value of similar intangible assets used by its competitors. Answer: (d) (a) Computer software. (b) Registered patent. (c) Copyrights that are protected . (d) Notebook computer.