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# problem 15-2 - PowerPoint PPT Presentation

problem 15-2. Doug Gregory. Problem. Three intangibles acquired by Hamm Ltd. (HL) in the current year are described below. HL, a progressive company with a variety of divisions and subsidiaries, has applied fair value measures on its balance sheet wherever permitted.

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### problem 15-2

Doug Gregory

Problem
• Three intangibles acquired by Hamm Ltd. (HL) in the current year are described below. HL, a progressive company with a variety of divisions and subsidiaries, has applied fair value measures on its balance sheet wherever permitted.
• Question A: Does each intangible as described above qualify to be recognized as an intangible asset? Explain briefly.
• Question B: Identify the appropriate method of accounting for each intangible described above after acquisition, and explain the decisions you have made.
Intangible Assets
• Defined as “an identifiable non-monetary asset without physical substance.”
• Three aspects to consider:
• Identifiability
• Can be separated from the entity and sold, transferred, licensed, rented, or exchanged; or
• Based on contractual or other legal rights, regardless of whether it is separable from the entity or other rights or obligations
• Control by an entity
• Future economic benefits
Recognition
• Recognized as an intangible asset when the following two are met:
• It is probable, using management’s best estimates of conditions that will likely exist, that the expected future benefits will be realized, and
• The cost of the asset can be reliably measured.