International Financial

Reporting Standards
Test
Intangible assets
 IFRS TRAINING PROGRAMME

Test: Intangible assets

Please attempt all 4 questions. Each question has only one correct answer. Please tick the appropriate
box.

1 Maine has incurred the following intangible asset related costs. Assuming that the costs relate
to a specifically identifiable asset, what should be the assets initial carrying cost?

$
1. Cost of license to supply product of parent company to local market for a
period of 10 years. 25,000
2. Legal fees preparing license agreement. 6,000
3. Internal costs of performing license profitability study. 8,000
4. Direct cost registering license with local authorities. 2,000

a. $33,000

b. $25,000

c. $41,000

d. $27,000

2 What amount should be included in the statement of profit or loss as profit on disposal of a
previously revalued intangible asset, in order to comply with IAS 38: Intangible assets?

a. The difference between net disposal proceeds and the net carrying amount

b. The difference between the net disposal proceeds and historical cost net book values

c. The difference between the net disposal proceeds and the net carrying amount plus
any remaining revaluation reserve balance relating to the assets

d. The difference between the net disposal proceeds and the depreciated historical cost

TEST INTANGIBLE ASSETS

IFRS TRAINING PROGRAMME

3 Maryland has recently acquired a new software application from an outside supplier. They
incurred the following costs:
$
Initial user’s license 10,000
Purchase cost 23,000
Staff training 5,000
Internal costs on feasibility study 2,000
Ongoing maintenance and technical support 5,000

What should be the initial cost of software that may be capitalised?

a. $33,000

b. $23,000

c. $45,000

d. $43,000

4 In its first year of trading to 31 July 20X6, Camp incurred the following expenditure on research
and development, none of which related to the cost of non-current assets.

 $12,000 on successfully devising processes for converting seaweed into chemicals X, Y

and Z
 $60,000 on developing a headache pill based on chemical Z

No commercial uses have yet been discovered for chemicals X and Y.

Commercial production and sales of the headache pill commenced on 1 April 20X6 and are
expected to produce steady, profitable income during a 5 year period before being replaced.
Adequate resources exist to achieve this.

What is the maximum amount of development expenditure that may be carried forward
as an intangible asset at 31 July 20X6 under IAS 38?

a. $48,000

b. $56,000

c. $60,000

d. $68,000

TEST I INTANGIBLE ASSETS