MCQs On VALUATION APPLICATION –INTANGIBLE ASSETS Part - 1

Q.1:- Intangible assets arise from the right to benefits from artistic works:

• Technology-based
• Artistic-related
• Customer-related
• Marketing-related

Q.2:- Items such as market knowledge, effective advertising programs, fundraising capabilities and trained staff are not regarded as assets because they ..........................:

• Are monetary items
• Are too difficult to manage
• Are not controlled by the entity
• Cannot be measured

Q.3:- If one or more assets are exchange for a new asset, the new asset is valued at:

• Market value
• Fair value
• Cost of assets received
• Cost of given up assets

Q.4:- Which of the following qualities should an asset possess for it to quality for recognition as an Assets?

• There should be probability of future economic benefit from it and it should be Within the entity's control
• There should be active market for assets
• There is remote possibility of future economic benefit SO.
• There should be possibility of sale of the product

Q.5:- From an accounting perspective, expenditure on development is:

• Regarded as a contingent asset and not capitalised
• Recognised directly as a part of equity
• expensed as incurred
• Capitalised as an intangible asset

Q.6:- The income approach is most common method applied to the valuation of intangible assets and is frequently used to value intangible assets including the following:

• Non-competition agreements.
• Trade names/trademarks/brands
• Operating licenses (e.g., franchise agreements, gaming licenses, broadcast spectrum
• All of the above

Q.7:- The distributor method is appropriate to value ____intangible assets when another intangible asset (for example, technology or a brand) is deemed to be the primary or most significant intangible asset and is valued under a multi-period excess earnings method:

• Marketing-related
• Contract related
• Customer-related
• Artistic-related

Q.8:- Which of the following approach is used for valuation of intangible assets?

• Cost approach
• Market approach
• Income approach
• All of the above

Q.9:- The cost of an intangible asset is comprised of the fair value of the consideration

• Less directly attributable costs
• less legal costs incurred in the purchase
• plus directly attributable costs
• plus indirect costs

Q.10:- In Case of a finite life, intangible assets are 'amortized:

• Over 5 years
• Over its useful life
• Over 15 years
• Over 10 years

Q.11:- Which of the following areas where intangible assets is required to be valued?

• Insurance, such as determining the personal worth of a celebrity/football franchise/cricket franchise
• Transaction (merger & acquisition) when the subject is the intangible itself, such as a brand/ telecolicense
• Bankruptcy / restructuring, etc
• All of the above

Q.12:- ______intangible assets include licensing and royalty agreements, service orsupply contracts, lease agreements, permits, broadcast rights, servicing contracts, employment contracts and non-competition agreements and natural resource rights:

• Customer-related
• Contract-related
• Marketing-related
• Artistic-related

Q.13:- Example of expenditure that are part of cost of an Intangible asset are:

• Refunded purchase tax paid
• Cost of introducing a new service
• Cost of testing, whether the asset is functioning properly
• Cost of introducing a new product

Q.14:- Which one is not an example of directly attributable cost for Intangible asset:

• Cost of testing
• Cost of introducing a new product or service
• Acquisition cost
• Research cost

Q.15:- intangible assets can be:

• Bought
• Rented
• Sold
• All of the above

Q.16:- Which of the following equation better represent value of intangible asset:

• Intangible asset value = Amortizable identified asset value — non amortizable identified asset value+ goodwill
• Intangible asset value =Amortizable identified asset value 4- goodwill
• Intangible asset value= Amortizable unidentified asset value —non amortizable identified asset value + goodwill
• Intangible asset value= Amortizable identified asset value —non amortizable asset value

Q.17:- ______intangible assets include customer lists, backlog, customer contracts, and contractual and non-contractual customer relationships:

• Artistic-related
• Marketing-related
• Technology-based
• Customer-related

Q.18:- Which of the following characteristics does not differentiate intangible assets from one another

• Image
• Value
• Market position
• Ownership

Q.19:- As per Ind As 20, With regard to government grants on intangible Assets and accounting for it which of the following statements is inaccurate?

• The asset related grant may be reported either on deferral method or offset method
• Assistance in cash or kind received from government or others is known as government grant
• When a grant is not in cash the grant should always be accounted for at a nominal value
• Government grant should preferably be accounted for on accruals basis

Q.20:- In case of exchange of assets, if the acquired assets ______ cannot be valued

• The cost of assets received is used
• The cost of assets given up is used
• Fair value of assets received is used
• None of the above

Q.21:- Which of the following expenses should be capitalised?

• Pure research
• Applied research and development cost
• Development cost
• Applied research

Q.22:- The with-and-without method is frequently used in the valuation of:

• Trade names/trademarks/brands
• Customer-related intangibles (e.g., backlog, contracts, relationships),
• Technology,
• Non-competition agreements

Q.23:- The criteria for defining intangible assets is/are:

• Inseparability
• Immateriality
• None of the above
• Both the above

Q.24:- Johnson Limited spent the following amounts on an engineering project: $10 000 on research salaries; $15 000 on equipment for a research laboratory; $30 000 on project development costs; and $6 000 on marketing costs. The amount that may capitalised is

• $51 000
• $30 000
• $61 000
• $36 000

Q.25:- The cost approach of valuation of intangible assets is generally used in the valuation of:

• Third party software
• Assembled workforce
• Internally developed software
• All of the above.

Q.26:- Income approach of valuation of intangible assets is not appropriate

• Taxi medallions
• Franchise agreements
• Trademarks
• Non-competition agreements

Q.27:- What is the appropriate discount rate for the intangible asset to be valued?

• Discount rate adjusted with discount
• Discount rate adjusted with necessary premiums or discounts
• Discount rate
• Discount rate adjusted with, premium

Q.28:- In circumstances where there is a revaluation decrement on revaluation of an intangible asset, any accumulated amortisation will be.............:

• transferred immediately to a revaluation reserve account
• recognised as a gain on revaluation
• eliminated at the time of revaluation
• credited to profit or loss

Q.29:- Intangible asset valuations are performed for a subject of litigation purposes includes:

• Marital dissolutions
• Damage calculations
• Shareholder disputes
• All of the above

Q.30:- Under the revaluation method of measuring an intangible, the asset is carried at fair value and subject to charges for

• amortisation and impairment
• increment in value
• inflation in value
• interest expense

Q.31:- Intangible asset valuations are performed for a variety of purposes includes:

• General consulting
• Subject of litigation
• Statutory or legal events
• All of the above

Q.32:- ______Intangible assets include plays, books, films and music, and from non-contractual copyright protection etc:

• Artistic-related
• Technology-based
• Marketing-related
• Customer-related

Q.33:- Which is/are an examples of intangible assets for which the market approach is sometimes used?

• Internet domain names
• Taxi medallions
• Broadcast spectrum
• All of the above

Q.34:- ______intangible assets represent the value of rights that arise from contractual agreements:

• Artistic-related
• Marketing-related
• Contract-related
• Customer-related

Q.35:- Which of the following areas where intangible assets is required to be valued?

• Impairment testing under Ind AS 36 impairment of assets
• Transfer pricing when an intangible asset is being transferred /licensed in/Out bet geographies/companies
• Purchase price allocation for accounting and financial reporting under Ind AS 103 business combination
• All of the above

Q.36:- The original and planned investigation undertaken with the prospect of gaining new knowledge is described as

• Research
• investigation
• Exploration
• Development

Q.37:- Amortization of intangible assets recognized in:

• Balance sheet
• Cash flow statement
• Statement of income
• Statement of changes in working capital

Q.38:- As per Ind AS 38, internally generated goodwill is:

• Not recognized as an asset
• Recognised as current asset
• Recognised as asset
• Recognised as fixed asset

Q.39:- Which of the following is not an Intangible asset?

• Copy right
• Patent
• Investment in marketable security
• Trade mark

Q.40:- Which of the following does not describe intangible assets?

• They provide long-term benefits.
• They lack physical existence.
• They are classified as long-term assets.
• They are financial instruments

Q.41:- An Intangible asset is an asset that lack physical substance and usually very hard to evaluate it include:

• Copyright
• franchises
• Trademark
• Patent

Q.42:- Type of technology related Intangible asset:

• trade name
• Customer list
• Substance without physical substance
• Trademark

Q.43:- An Intangible Asset shall be recognised if:

• There is remote possibility of future economic benefit
• Can be recognized as and when expenditure incurred
• it is probable that expected future economic benefit that are attributable to the assets will flow to the entity and the cost of assets can be measured reliably
• Cost is uncertain

Q.44:- ____intangible assets are created with an entity establishing relationships with its customers in the due course of its business:

• Artistic-related
• Technology-based
• Marketing-related
• Customer-related

Q.45:- Intangible asset valuations are performed for a financial reporting purpose includes:

• Asset acquisitions and sales
• Impairment analysis
• Accounting for business combinations
• All of the above

Q.46:- The residual value of intangible assets with finite useful life shall be assumed to be zero unless:

• There is an active market for the assets
• There is a commitment by a third party to purchase the assets at the end of its useful life
• None of the above.
• kibosh a and b

Q.47:- If a development projects meets with all the conditions stipulated in IAS 38, the requirement of the standard is that the costs of that project?

• shall be fully capitalised
• may be partly capitalised and partly expensed
• may be capitalised depending on company’s policy
• shall be fully written off as expense

Q.48:- The income approach is the most common method applied to the valuation of intangible assets and is frequently used to value intangible assets including the following:

• Customer-related intangibles (e.g., backlog, contracts, relationships),
• Trade names/trademarks/brands
• Technology
• All of the above

Q.49:- Which of the following, method, would you consider appropriate while valuing the intangible assets?

• Exclusive
• Consistent
• Relative
• Multiple

Q.50:- During profit split method, rule of thumb is:

• 60% to 70%
• 25% to 33%
• 5% to 15%
• 5% to 10%