MCQs On VALUATION APPLICATION –INTANGIBLE ASSETS Part - 2

Q.1:- Royalty agreements fall under which of the following categories of intangible assets:

• Contract related
• Customer related
• Artistic related
• Market related.

Q.2:- Relief-from-royalty method estimates the value an asset based on the value of the royalty payments: .

• Received by the company from the useful life of the asset
• From which the company is relieved. due to its ownership of the asset
• Over and above the internal rate of return
• Made by the company to acquire ownership of the asset

Q.3:- Which of the following is not a government grant?

• A cost free land allocated to build a staff health care center.
• An amount received towards the cost of cleaning factory effluence before draining into nearby river.
• Compensation received from a property developer to gain access to land.
• A cost free license received from a local borough to operate a taxi service.

Q.4:- The divergence between Books value and market value is due to the reason

• Book value is historical
• Market rewards more
• The conventional balance sheet does not reflect value of intangible assets
• All the above

Q.5:- Greenfield method of income approach of valuation of intangible assets is generally used for the valuation of:

• Franchise agreements
• Broadband spectrum
• Both (a) and (b)
• Trademarks

Q.6:- Which of the following is/are income approach methods?

• Greenfield method
• Distributor method
• Relief-from-royalty method
• All of the above

Q.7:- Which of the following discount rates cannot be used for valuation of intangible assets?

• Cost of equity
• External based rate of return
• Risk-free interest rates
• Internal rate of return

Q.8:- Which of the following significant considerations shall be made for the valuation of intangible assets?

• To consider the legal rights of the intangible asset to be valued
• To evaluate the highest and best use considerations
• To determine the purpose and objective of the overall valuation assignment
• All of the above

Q.9:- Which of the following factors should be considered for determining the discount rate used for valuation of intangible assets?

• Intangible assets having a higher economic life have more risk associated than intangible assets having a lower economic life, other things remaining the same.
• Intangible assets with definite and determinable cash flows have relatively less risk associated as compared to intangible assets not having determinable cash flows
• Generally intangible assets have relatively more risk associated than tangible assets, a group of assets or business as a whole
• All of the above

Q.10:- Which of the following significant considerations shall be made for the valuation of Intangible assets?

• To consider any specific laws or regulations guiding the intangible assets valuation
• To determine the purpose and objective of the overall valuation assignment
• To assess the history and development of the intangible asset
• All of the above

Q.11:- Subsequent to initial recognition of an intangible asset, an entity may choose to measure the item using the:

• net method
• revaluation method
• cash flow method
• gross method

Q.12:- Which of the following discount rates can be used for valuation of intangible assets?

• Cost of equity
• Cost of debt
• Weighted average cost of capital
• All of the above

Q.13:- Under which method, the value of the intangible asset to be valued is equal to the present value of the difference between the projected cash flows over the remaining useful life of the asset under the following two scenarios business with all assets in place including the intangible asset to be valued; and business with all assets in preface except the intangible asset to be valued.

• Relief from royalty method
• Comparable transaction method
• With-or-without method
• Greenfield method

Q.14:- Intangible asset valuations are performed for a variety of purposes Includes: poses

• Tax reporting purposes
• Subject of litigation
• Financial reporting purposes
• All of the above

Q.15:- Which of the following characteristics differentiate Intangible assets from one another?

• Function
• Ownership
• Both a and b
• Existence

Q.16:- Customer based intangibles may be:

• Non-contractual
• Contractual
• None of the above
• Both (a) and (b)

Q.17:- An entity shall assess the probability of expected future economic benefit using reasonable and supportable assumption that represent of the set of economic conditions that will exist over the useful life of the asset.

• Management best estimate
• Market best estimate
• Auditor best estimate
• Valuer best estimate

Q.18:- Which of the following methods of amortization is normally used for intangible assets?

• Units of production
• Double-declining-balance
• Straight-line
• Sum-of-the-years'-digits

Q.19:- What are intangible assets?

• Monetary assets with physical substance
• 'Non-monetary assets without physical substance
• Non-monetary assets with physical substance
• Monetary assets without physical substance

Q.20:- An is a non-monetary asset that manifests itself by its economic properties. It does not have physical substance but grants rights and/or economic benefits to its owner.

• Intangible asset
• Immovable Assets
• Artificial Assets
• Tangible asset

Q.21:- Which of the following characteristics do intangible assets possess?

• Claim to a specific amount of cash in the future.
• Long-lived.
• Held for resale.
• Physical existence.

Q.22:- Which of the following is not an intangible assets:

• Motion picture films
• Musical work
• Competition agreement
• Literary work

Q.23:- Which of the following method you would consider appropriate while valuing Intangible assets:

• Consistent
• Relative
• Multiple
• Exclusive

Q.24:- How often should the useful life of Intangible asset with a finite useful life be reviewed:

• Every Five year
• Every two year
• Every Three year
• Every year

Q.25:- Intangible assets are used primarily in the marketing or promotion of products or services include trademarks, trade names, unique trade design and internet domain names:

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

Q.26:- ____intangible assets include patented technology, unpatented technology, databases, formulae, designs, software, processes or recipes:

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

Q.27:- The importance of valuing intangible assets arises from the fact that:

• The reported net worth of businesses may not be reflecting its true value, which most likely is in the form of tangible assets
• The reported net worth of businesses may not be reflecting its true value, which most likely is in the form of intangible assets
• The reported net worth of businesses may be reflecting its true value, which most likely is in the form of intangible assets
• None of the above

Q.28:- intangible asset valuations are performed for a tax reporting purposes includes:

• Estate and gift tax planning
• Ad valorem taxation analyses
• Transfer pricing analyses
• All of the above

Q.29:- Trade name and trade design are example of:

• Artistic-based intangible assets
• Marketing-based intangible assets
• Technology-based intangible assets
• Customer-based intangible assets

Q.30:- A company is searching for a white board marker the writings of which, instead of being rubbed off, may be blown out when lecturers breathe on them from a distance. Which of the following expenses incurred by the company qualifies to be classified as development cost?

• Production of sample markers to be distributed free to learn of customer reaction
• Advertising the product to study whether there is a market for it
• Mixing chemicals to study how they react to human breath
• Buying equipment and chemicals for use on this project

Q.31:- If an intangible asset is exchange for another, the cost of intangible assets is measured at:

• Cost price
• Acquisition price
• Fair value
• Market price

Q.32:- As per Ind AS 38 internally generated good will is:

• Not recognised as an asset
• Recognised after 3 years
• Recognised as an assets
• Recognised if accrued

Q.33:- The carrying amount of an item shall be derecognized:

• When no future benefits are expected from its use or on disposal
• When future benefits are expected from its use but require to incurred cost of disposal
• When disposal of assets is at Rs. 10,000
• When future benefits are expected from its use but having no disposal value

Q.34:- Which of the following areas where intangible assets is not required to be valued?

• Financing, when an intangible is used as a collateral
• Litigation, when there has been a breach of contract /right and the compensation has to be determined
• Taxation by way of a purchase price allocation for claiming tax deductions when a business is transferred by a slump sale
• None of the above

Q.35:- ____intangibles arc those intangible assets that create propriety knowledge:

• Artistic-related
• Technology-based
• Contract-related
• Marketing-related

Q.36:- The cost of goodwill purchase as part of an acquisition of an ongoing business shall be:

• Never amortised but there shall be an annual impairment
• Amortised immediately
• Amortised after 5 years
• Amortised after 5 years

Q.37:- The cost of separately acquired Intangible asset does not comprise of:

• Its purchases price including non-refunded purchases taxes
• Its purchases price
• Woks purchase price including import duties and refundable, purchase taxes.
• None of the above

Q.38:- What type of assets are permitted in India after application of tax amortization benefits?

• Intangible asset
• Immovable asset
• Tangible Assets
• All of the above

Q.39:- Which of the following is an intangible assets:

• Processes
• Trade Secrete
• Formulae
• All of the above

Q.40:- ____is an intangible asset that represents non-physical items that add to a company's value but cannot be easily identified or valued

• Trade Name
• Tangible -asset
• Goodwill
• Copy Right

Q.41:- Which of the following IVS deals with Intangible Assets:

• IVS 210
• IVS 500
• IVS 200
• IVS 400

Q.42:- An intangible asset is

• an identifiable monetary asset without physical substance
• an identifiable non-monetary asset without physical substance
• an identifiable monetary asset having physical substance
• an identifiable non-monetary asset having physical substance

Q.43:- Which of the following is not an example of market based intangible assets?

• Internet domain name
• Trademark
• Lease agreement
• Brand

Q.44:- When measuring an intangible asset initially, which of the following valuation methods must be used?

• fair value
• acquisition price
• market value
• cost

Q.45:- Which of the following statement relating to intangible asset is correct?

• All expenditure on intangible need to be capitalized if only incurred in current financial year
• A resource, though intangible may be capitalised if it qualifies to be capitalised if it is identifiable and meet the capitalisation criteria
• All expenditure on intangible need to be capitalised
• A resource, though intangible may be capitalised if it qualifies to be capitalised if it is identifiable but does not meet the capitalisation criteria

Q.46:- Which of the following is/are income approach methods?

• Relief-from-royalty method
• Premium profit method or with-and-without method
• Excess earnings method
• All of the above

Q.47:- Market approach of valuation of intangible assets is appropriate for the valuation of:

• Benefits arising from trained and experienced workforce.
• Internet domain names
• Trade names
• All of the above.

Q.48:- Which of the following statements with regard to accounting for goodwill and other intangibles is not correct?

• Impairment written off in respect of an intangible can be corrected when circumstances change
• Amortisation is the name given to depreciation of an intangible asset.
• The cost of an intangible asset with indefinite life must be regularly reviewed
• An amount expensed can be added back to cost when the intangible meets asset recognition criteria

Q.49:- The recognition criteria that an asset must meet before it may be recognised and presented in the financial statements include:

• a probability that future economic benefits will flow to the entity
• That the recognition of the asset is relevant to user decision making
• a likelihood that the cost of the asset is verifiable
• that the information about the asset is neutral

Q.50:- If an intangible assets is revalued upward, the increase in value should be credited:

• Profit and loss account
• The equity under revaluation surplus
• To Capital reserve
• To General reserve