When a patent or trademark is acquired in a business combination, what does IAS 38 say about recording these intangibles?

Question

Quizplus · Accepted Answer

According to IAS 38, if a patent or trademark is acquired in a business combination, it should be recorded as a separate intangible asset if its fair value can be reliably measured. If the fair value cannot be reliably measured, it should be included in the overall amount allocated to goodwill. Option A is incorrect because if the acquired company had previously recorded the intangible asset as a separate asset, it should be respected and recognized as such by the acquiring company. Option B is incorrect because the cost of the intangible assets should be capitalized and amortized over their useful life, not expensed on the merger date. Option C is incorrect as the classification of an intangible asset as indefinite-lived or finite-lived is not a determining factor in whether it should be recorded as a separate asset.

When a Patent or Trademark Is Acquired in a Business