When acquired in a business combination,the cost of an intangible asset is its:
A)carrying amount at the date of acquisition
B)fair value at the date of acquisition
C)recoverable amount at the date of acquisition
D)none of the above

Question

Quizplus · Accepted Answer

When an intangible asset is acquired as part of a business combination, its cost is determined as the fair value at the date of acquisition. This is the amount that the buyer would have paid to acquire the intangible asset on the date of acquisition, based on its market value at that time. The fair value of the intangible asset is based on various factors such as its expected future cash flows, expected useful life, risk associated with the asset, and any other market factors that may affect its value. Therefore, choice B is the best answer. The carrying amount and recoverable amount of the intangible asset at the date of acquisition are not relevant in this case, as these amounts are based on the company's historical records and estimates, and not on the market value at the date of acquisition.

When Acquired in a Business Combination,the Cost of an Intangible