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Fundamentals of financial accounting

5.4 What is the correct accounting treatment for an intangible asset with an
indefinite useful life?

A It is recognised at cost for so long as the entity has the intangible asset

B It is recognised at cost and is subject to an annual impairment review

C It is recognised at cost and the entity must make an estimate of estimated
useful life so that it can be amortised

D It cannot be recognised as an intangible asset as it would not be possible
to calculate an annual amortisation charge

CHAPTER 6 – NON-CURRENT ASSETS: DISPOSAL, REVALUATION
AND IMPAIRMENT

6.1 Complete the following statement by selecting appropriate wording from the
choice available.

When accounting for intangible assets using the revaluation model,
movements in the carrying amount are ________________________.

A accounted for in other comprehensive income and other components of
equity

B accounted for in the statement of profit or loss only

C accounted for in other comprehensive income only

D accounted for in other components of equity only

6.2 A new piece of equipment was purchased by an entity during January X6 for:

Cost $20,000

Legal fees $300

Total $20,300

The entity has a year-end of 31st December and depreciate all equipment 25%
per annum reducing-balance method, charging a full year’s depreciation in the
year of acquisition and none in the year of disposal. The equipment was traded
in for a replacement in August 20X9 at an agreed value of $11,500.

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