When a Patent or Trademark Is Acquired in a Business

question 15

Multiple Choice

When a patent or trademark is acquired in a business combination, what does IAS 38 say about recording these intangibles?

• A) If they had not been previously recorded as separate assets by the acquired company, they should always be recorded as "Goodwill" on the balance sheet of the company acquiring them.
• B) The cost of the intangibles should be expensed by the acquiring company on the merger date.
• C) They should be recorded as separate intangible assets only if their useful life is indefinite.
• D) They should be recorded as separate intangible assets if their fair value can be reliably measured.

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Definitions:

Histogram

A graphical representation of data where the frequency of the variables is represented by bars of different heights.

Rules Of Thumb

Simple, practical guidelines or principles, typically based on experience rather than theory, used to make judgments and decisions.

Heuristics

Mental shortcuts or rules of thumb that simplify decision-making processes, often leading to rapid judgements or problem-solving strategies.

Displacement

A defense mechanism where mind shifts emotional impulses from a real object to a safer substitute target.