Which of the following would be use of Straight-Line Method of Amortization be acceptable?
a) building
b) Patent
c) Goodwill
d) All of the above
1 Comment(s)
General answer is ” it depends because of Accounting Policy of the Company.”
Specific comments are given below
1-buliding – Yes – subject to Accounting Policy of Company
2-Patent – It is to amortized over the lif of patent , for which company is expected to benefit. (Patent cost / no. of years = per year amortization)
3-Goodwill – According to International Financial Reporting Standards or Local Laws or US /UK GAAP, according to applicable regulation of country’s residence.Since i know IFRS , Goodwill is to be allocated to “Cash Generating Units” and will be adjusted against it. In this case it is NOT STRAIGHT LINE ( IAS – 36 – Impairment of Assets)
Answer (a) is correct answer ( Subject to Accounting Policy )
Get back to me , if you require further clarificaition .
General answer is ” it depends because of Accounting Policy of the Company.”
Specific comments are given below
1-buliding – Yes – subject to Accounting Policy of Company
2-Patent – It is to amortized over the lif of patent , for which company is expected to benefit. (Patent cost / no. of years = per year amortization)
3-Goodwill – According to International Financial Reporting Standards or Local Laws or US /UK GAAP, according to applicable regulation of country’s residence.Since i know IFRS , Goodwill is to be allocated to “Cash Generating Units” and will be adjusted against it. In this case it is NOT STRAIGHT LINE ( IAS – 36 – Impairment of Assets)
Answer (a) is correct answer ( Subject to Accounting Policy )
Get back to me , if you require further clarificaition .
Cheers
Bayzz | Feb 15, 2010 | Reply