Under IAS 38/AASB 138, Which Statement Concerning Internally Generated Intangible

question 5

Multiple Choice

Under IAS 38/AASB 138, which statement concerning internally generated intangible assets is incorrect?

• A) They can only be recognised if their cost can be measured reliably.
• B) If patents and copyrights are deemed to be in the research phase all expenditure incurred should be expensed rather than capitalised.
• C) It is likely that the cost of internally generated brand names, mastheads and customer lists can be measured reliably.
• D) The tests for recognising internally generated intangibles are more stringent than for recognising internally generated property, plant and equipment.

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Definitions:

Fixed Cost Per Unit

The total fixed costs of production divided by the number of units produced, decreasing as production volume increases.

Relevant Range

The level of activity within which the assumptions about fixed and variable costs in cost-volume-profit analysis remain valid.

Contribution Margin Ratio

A financial metric that shows the percentage of sales revenue that exceeds variable costs, indicating the portion contributing to covering fixed costs and generating profit.

High-Low Method

A technique that uses the highest and lowest total costs as a basis for estimating the variable cost per unit and the fixed cost component of a mixed cost.