Asked by Ansley Bailey on Jul 26, 2024
Verified
Unless acquired under a business combination, intangible assets must be initially measured using which of the following measurement approaches?
A) Net present value.
B) Cost.
C) Diminishing value.
D) Fair value.
Business Combination
A transaction or other event in which an acquirer gains control over one or more businesses, often involving mergers, acquisitions, or consolidations.
Net Present Value
A method used in capital budgeting to evaluate and compare the profitability of investments, calculating the difference between the present value of cash inflows and outflows over a period of time.
Cost
The value of the economic resources used as a result of producing or doing something.
- Acknowledge the benchmarks for the classification of intangible assets in financial reports.
Verified Answer
RR
Rylee RodriguezJul 30, 2024
Final Answer :
B
Explanation :
Intangible assets must be initially measured at cost, which includes all directly attributable costs necessary for acquiring, developing or enhancing the asset. Net present value and diminishing value are methods of calculating the depreciation of the asset over time, and fair value is only used in certain circumstances such as business combinations. But, for initial measurement, cost is the appropriate approach.
Learning Objectives
- Acknowledge the benchmarks for the classification of intangible assets in financial reports.