Exam (elaborations)
CPA FAR EXAM WITH COMPLETE SOLUTIONS LATEST UPDATE
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CPA FAR EXAM WITH COMPLETE SOLUTIONS LATEST UPDATE...
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CPA FAR EXAM WITH COMPLETE SOLUTIONS LATEST UPDATEInvoluntary Conversions - ANSWER Gain/loss recognized
Non-monetary exchanges lacking commercial substance - ANSWER No cash received =
no gain.
Losses = Recognized.
Recognizing Gains & Losses in non-monetary transactions - ANSWER G&L are always
recognized in exchanges having commercial substance and are computed as the
difference between Fair Value & Book Value of the asset given up
Commercial Substance - ANSWER An exchange has commercial substance if the future
cash flows change as a result of the transaction. A Fair Value approach is used
Computer Software developed to be sold, leased, or licensed - ANSWER -Expense costs
[planning, design, coding, and testing] incurred until technological feasibility has been
established.
-Capitalize costs [coding, testing, producing product masters] incurred after
technological feasibility has been established
-Technological Feasibility is established upon completion of a detailed program
design/working model
Items not considered Research & Development - ANSWER Marking research, quality
control testing, and reformulation of a chemical compound
Research & Development Costs - ANSWER Are all expensed
EXCEPT:
-Materials, equipment, or facilities that have alternative uses [instead should capitalize
and depreciate them by their useful lives]
, Research & development costs of any type incurred for others under an agreement
Start-up costs - ANSWER Are expensed
Continuing Franchise Fees - ANSWER Are expensed as incurred
Initial Franchise Fees - ANSWER Are amortized
Valuation of Intangibles - ANSWER -Finite life intangibles reported at cost less
amortization & impairment
-Indefinite life intangibles are reported at cost less impairment [ex: goodwill]
Change in useful life of an intangible asset is. - ANSWER A change in estimate
[prospective]
Do intangibles with indefinite lives get amortized? - ANSWER no
Amortization [intangible assets] - ANSWER Value of the intangible eventually disappears
so the cost of each type of intangible [except goodwill & assets with indefinite lives]
should be amortized
Internally Developed Intangible Assets - ANSWER Are Expensed
-Examples: Trademarks, goodwill from advertising, the cost of developing, maintaining,
or restoring goodwill
-EXCEPTIONS Include: Legal Fees, registration and consulting fees, design costs, and
other direct costs to secure asset
Intangible Assets - ANSWER Long-lived legal rights and competitive advantages
developed or acquired by a business enterprise
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