Certificate in International Financial Reporting Intangibles, Tax, and Cash Flow

Question 1

Under IAS 38, an intangible asset can be recognised only if:

Accepted Answer

It is identifiable, controlled by the entity, and expected to generate probable future economic benefits

Answer

IAS 38 requires identifiability, control, and probable future benefits for intangible asset recognition.

Question 2

Under IAS 38, internally generated goodwill is:

Accepted Answer

Not recognised as an asset

Answer

IAS 38 prohibits recognition of internally generated goodwill because it cannot be reliably measured.

Question 3

Under IAS 38, research costs are:

Accepted Answer

Expensed as incurred

Answer

IAS 38 requires research phase costs to be expensed because they do not yet meet the asset recognition criteria.

Question 4

Under IAS 12, a deferred tax liability arises when:

Accepted Answer

The carrying amount of an asset exceeds its tax base

Answer

A taxable temporary difference—carrying amount exceeds tax base—creates a deferred tax liability.

Question 5

Under IAS 12, deferred tax assets are recognised only when:

Accepted Answer

It is probable that sufficient future taxable profit will be available to utilise the temporary difference

Answer

IAS 12 requires probability of future taxable profits against which the deductible difference can be offset.

Certificate in International Financial Reporting Practice Test