Financial Reporting (FR) Mar / June 2021 Examiner’s report
Question 1 What is the correct answer?
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- Điều hướng trang này:
- Where did candidates go wrong
| Question 1
What is the correct answer? The correct responses are: A – Intangible assets should be amortised over the expected useful life or not at all if the useful life is deemed to be indefinite C – Intangible assets should be amortised on the basis of the expected pattern of consumption of the expected future economic benefits Amortisation is the systematic allocation of the depreciable amount of an intangible asset over its useful life. It serves the same function as depreciation for a tangible non-current asset. Where the intangible asset has a finite useful life, it should be amortised. A variety of amortisation methods can be used (e.g. straight-line or reducing balance method). The method used should be selected on the basis of the expected pattern of consumption of the future economic benefits. Some intangible assets may have an indefinite useful life (i.e. there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity) – this includes goodwill. In such cases, these intangible assets are not amortised but are instead tested for impairment annually and whenever there is an indication that the intangible asset may be impaired. Option B is not correct as this would only apply to intangible assets with an indefinite useful life (such as goodwill). It does not apply to intangible assets as a whole and the question specifically excluded goodwill. Option D is not correct and would lead to intangible assets being overstated in the accounts. Where did candidates go wrong? Most candidates got this question right and, in particular, candidates tended to know that option A was correct, even if they did not also select option C. The second most common answer was to select options A and B together. This implies that some candidates were rushing or did not read the question carefully enough, perhaps not examining each option available or whether their selections tải về 0.8 Mb. Chia sẻ với bạn bè của bạn:
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