New Zealand Financial Accounting 6Th Edition Deega Test Bank Full Chapter PDF

New Zealand Financial Accounting 6th
Edition Deega Test Bank

Visit to download the full and correct content document: https://testbankdeal.com/dow
nload/new-zealand-financial-accounting-6th-edition-deega-test-bank/
Chapter 08 - Accounting for intangibles
1. Intangible assets that are amortised are no longer subjected to impairment testing.
True False
2. Research of market potential prior to the launch of a product is permissible to be capitalised as an intangible
asset.
True False
3. Internally generated brands, mastheads, publishing titles and customer lists are permitted to be recognised as
intangible assets.
True False
4. AASB 138 permits the use of revaluation model for intangible assets if there is an active market to determine
fair value.
True False
5. The revaluation model requires all intangible assets in the same class to have a fair value determined by
reference to an active market.
True False
6. If the fair value of a revalued intangible asset can no longer be determined by reference to an active market,
AASB 136 requires the use of the cost model.
True False
7. Internally generated identifiable intangible assets may be recognised for financial accounting purposes in
Australia.
True False
1
8. Goodwill is a term used for the composite asset of identifiable intangibles:
True False
9. There are only rare occasions when an identifiable intangible asset should be amortised.
True False
10. International convergence has meant that there is no longer one specific standard related to intangibles:
True False
11. Development costs are less likely to meet the test for deferral than research costs:
True False
12. Compared to the requirement in the US, the treatment of research and development costs in Australia is less
conservative (that is, likely to result in higher profits):
True False
13. AASB 138 requires that all intangibles, whether purchased or internally generated, be capitalised.
True False
14. Continuously Contemporary Accounting emphasises an entity's ability to adapt. Therefore goodwill is
considered an important asset in this model:
True False
15. Intangible assets without a limited useful life cannot be recorded under AASB 138 as they cannot be
amortised.
True False
2
16. According to AASB 138 on intangible assets, if an entity buys another entity separate values can be
assigned to purchased goodwill and to a brand name:
True False
17. Expenditure on an intangible asset that was initially expensed may be recognised as part of an intangible
asset at a later date.
True False
18. AASB 138 prohibits the recognition of intangible assets using the revaluation model.
True False
19. Identifiable intangible assets are those intangible assets that:

A. Have been purchased by the entity from external parties.
B. Have an unlimited life.
C. Can have a value placed on them separately from other assets of the entity.
D. Cannot be separately sold.
E. All of the given answers.
20. Examples of intangible assets include:

A. Loyal customers.
B. Patents and trademarks.
C. Provisions.
D. Loyal customers, patents and trademarks.
21. Examples of elements of a business that commonly make up goodwill are:

A. Patents and licences.
B. Trademarks and brand names.
C. Research and development.
D. Established reputation and loyal customers.
3
22. Because intangible assets have no physical form:
A. They are not subject to the recognition criteria of other assets and may be recorded if they satisfy the three
elements of the definition.
B. They must be expensed immediately as assets must be able to be measured.
C. They have no real value and should be excluded from accounting reports.
D. They cannot be sold separately and must all be classified as unidentifiable.
E. None of the given answers.
23. An intangible asset may be recorded.

A. If acquired from an external party at a cost.
B. If it is internally generated and fits the definition of an asset and meets the associated recognition criteria.
C. At a value other than cost if that value more reliably records the worth of the intangible asset.
D. At the cost of the asset, which must exclude any additional expenditure required to prepare the asset for use.
E. If acquired from an external party at a cost, and at the cost of the asset, which must exclude any additional
expenditure required to prepare the asset for use.
24. In order to determine whether or not expenditure should be treated as an intangible asset, the relevant test to
apply in Australia is:
A. It should be recognised when (a) it is definite that future economic benefits will eventuate or (b) the asset
possesses a cost or other value that can be measured reliably.
B. It should be recognised if (a) the expenditure is with an external party in an arm's length transaction for a
separately identifiable intangible asset or (b) the intangible asset arises as the difference between the net
tangible assets of an entity and the price paid for that entity.
C. It should be recognised if (a) it is part of a specified plan by management to develop and maintain a
separately identifiable asset or (b) the intangible asset was purchased in an arm's length transaction and is
actively traded in a market.
D. It should be recognised when and only when (a) it is probable that future economic benefits will eventuate
and (b) the asset possesses a cost or other value that can be measured reliably.
25. AASB 138 states that intangible assets:

A. May not be revalued and must be amortised over their useful lives.
B. Are only able to be revalued if they have been internally generated and there is an active market for them.
C. May only be revalued to their fair value as assessed by a licensed valuer.
D. may be measured by using either the cost model or the revaluation model.
4
26. AASB 138 defines development as:
A. The activities undertaken with specific commercial objectives, including original research, to develop plans
or designs for new products or significant improvements to existing products.
B. The application of research findings or other knowledge to a plan or design for the production of new or
substantially improved material, devices, processes, systems or services prior to the commencement of
commercial production or use.
C. The activities undertaken to translate research findings into feasible projects for subsequent development for
commercial objectives such that the recoverable amount is expected to be greater than the cost.
D. The activities undertaken with the expectation by management that future economic benefits in the form of
new products or improvements to existing products are likely to result, based on research completed to date.
27. What is the test for deferral of research costs as required by AASB 138?
A. Research costs can be deferred (recorded as an asset) when it is probable that the project they are applied to
will bring future economic benefits.
B. Research costs may not be deferred unless it is almost certain that the project they are applied to will bring
future economic benefits.
C. Research costs may not be recorded as an intangible asset.
D. Research costs may be deferred if the entity can demonstrate that an intangible asset exists and that it will
generate future economic benefits.
E. Research costs may be recorded as an intangible asset if the company intends to develop the product further.
28. Which of the following statements is correct with respect to research and development expenditures in
accordance with AASB 138?
A. Activities aimed at obtaining knowledge that is likely to produce a viable commercial product can be
capitalised.
B. Formulation, design, evaluation and final selection of alternative materials to be used in producing a viable
commercial product can be capitalised.
C. Design, construction and operation of a pilot plant that is not of a scale economically feasible for commercial
production can be capitalised.
D. Search for, evaluation and final selection of, applications of research findings and other knowledge can be
capitalised.
5
29. The requirement of AASB 138 in relation to the amortisation of development cost is that:
A. It is to be amortised straight-line over a period not greater than 20 years.
B. It is to be amortised from the time of deferral so as to match the cost to the related benefits.
C. It is to be amortised using an accelerated depreciation rate over a period not exceeding 10 years.
D. It is to be amortised from the time the asset is available for use and shall reflect the consumption of the
economic benefits by the entity.
30. Glass 4 Windows is involved in a research and development project to create a filtering window that
removes the need for curtains. For the current year ended 30 June 2004 expenditure on the project is as follows:
Research $235,000
Development costs $350,000
The window is expected to earn revenues of $70,000 per year for the 10 years commencing 1 July 2004. Assuming straight-line amortisation, how
much of the research and development cost should be expensed this period and what amount should be amortised in the year ended 30 June 2007?
A. Expensed in 2004: $58,500 Amortisation in 2007: $58,500
B. Expensed in 2004: $235,000 Amortisation in 2007: $35,000
C. Expensed in 2004: $235,000 Amortisation in 2007: $28,000
D. Expensed in 2004: $350,000 Amortisation in 2007: $23,500
31. Walking on Air is developing a new form of individual transport that will act like a personal hovercraft.
Costs for the year ended 30 June 2004 are:
Research $950,000
Due to the high individual cost of items sales of this 'prototype' model will be small and generate $100,000 per year over the next 4 years. Following
that time, a new and cheaper consumer model will be under production based on the research developed for the prototype; however, it will require
additional development expenditure. How much of the research and development cost should be expensed in the period ended 30 June 2004 and what
amount should be amortised in the year ended 30 June 2006 (rounded to the nearest dollar)?
A. Expensed in 2004: $1 200,000 Amortisation in 2006: $100,000
D. Expensed in 2004: $1,200,000 Amortisation in 2006: $30,000
E. Expensed in 2004: $160,000 Amortisation in 2006: $160,000
6
32. There is a concern that research and development may be reduced as a result of the new requirements in
AASB 138 because:
A. Companies will not have the cash available to pay for the research expenses up-front.
B. Recognising expenses early will allow for larger profits later, which will help smaller firms.
C. The 'horizon problem' suggests managers will not invest in long-term projects that do not immediately
increase profits.
D. Shareholders are only interested in short-term profits and will not be impressed by strategies that attempt to
increase the long-term value of their shares.
33. Castle Co Ltd is working on three research projects. Project Jonah is government-sponsored research on
synthesising currently available research results on the possible triggers of asthma attacks. Project Beta involves
researching the genetic tags associated with heart disease based on the genome project. A test to identify the
predisposition to heart disease in children has been developed and will be on the market in 2003. Since 2001
research and development expenditures on this project are applied development costs only. Project Sigma is
cutting edge research being conducted to try and discover a means of 'disassembling' molecules and then
'reassembling' them in their original form. The company hopes that this work will lay the basis for future
dreams of teleportation as a method of transport. Details of expenditures and recoverable amounts expected
beyond a reasonable doubt at this time are:
Actual Budget
$000 $000
Project 2001 2002 2003 2004
Jonah
Development expenditure 20 15 5 0
Expected revenue inflows 10 0 0 0
Beta
Sigma
What is the total research and development deferral for each project as at the end of the year 2002?
A. Jonah: $15,000 Beta. $90,000 Sigma. $0
B. Jonah: $20,000 Beta. $50,000 Sigma. $30,000
C. Jonah: $15,000 Beta. $70,000 Sigma. $50,000
D. Jonah: $0 Beta. $90,000 Sigma. $0
7
34. Serendipity Ltd is working on two independent research and development projects. Project A has recently
been fruitful and the resulting product has been marketed, unfortunately with limited success. Development of
the product is continuing in an effort to improve its marketability. Project B is due for product release in one
year's time. The initial marketing surveys and forward contracts suggest that the outcome for this product is
very favourable. The following information relates to the expenditures for the current period and budgeted
figures for the next 3 years. All research costs in prior periods were expensed. The budgeted figures are
considered accurate beyond a reasonable doubt.
Actual $000 Budg

et
$000
Project 2003 2004 2005 2006
A
Research 12 0 0 0
B
Research 41 0 0 0
What is the research and development deferral for each project in 2003?
A. Project A. $5,000 Project B. $0
B. Project A. $47,000 Project B. $131,000
C. Project A. $30,000 Project B. $90,000
D. Project A. $62,000 Project B. $131,000
35. AASB 138 describes the distinction between the treatment of internally generated goodwill and purchased
goodwill (as well as other intangibles) as arising because:
A. The two different sources of goodwill result in two different types of asset.
B. Internally generated goodwill is developed in order to be sold, so its value will be recognised at that time.
C. Internally generated goodwill cannot be reliably measured.
D. Recording purchased goodwill could lead to the manipulation of profit and asset amounts.
8
36. The treatment of internally generated goodwill varies from purchased goodwill under AASB 138 in that:
A. Purchased goodwill is not amortised whereas internally generated goodwill is assumed to be maintained
indefinitely.
B. Purchased goodwill may be recorded as an asset, whereas internally generated goodwill may not.
C. Internally generated goodwill is to be amortised over a period of no greater than 20 years, whereas purchased
goodwill may not be recorded.
D. Purchased goodwill is to be expensed in the period it is bought whereas internally generated goodwill is to be
deferred and amortised over a period of no less than 20 years.
37. Purchased goodwill is recognised as the amount of:

A. The excess of the cost of acquisition incurred by an acquirer over the fair value of the identifiable net assets
acquired.
B. The difference between the cost of acquisition of a subsidiary and the realisable value of net assets of the
subsidiary.
C. The lower of the sum of related expenditures on advertising and promotion undertaken in the last 2 years by
the subsidiary being purchased and the independent valuation of the market value of that subsidiary's goodwill.
D. The excess of the cost of acquisition of another entity by an acquiring entity over the recoverable value of
the identifiable net assets acquired.
E. The excess of the cost of acquisition incurred by an acquirer over the fair value of the identifiable net assets
and contingent liabilities acquired.
38. Far-flung Co Ltd purchases Local Co Ltd for the purchase consideration of:
Cash $100,000
Shares in Far-flung Co Ltd 50,000 shares with a market value of $1.60
Land Carrying value of $90,000Fair value of $100,000
Far-flung incurred legal fees of $6,000 to complete the acquisition. Local Co Ltd had the following assets and liabilities at the time of the purchase:
Carrying amount Recoverable amount Fair value
Assets:
Land 100,000 150,000 200,000
Machinery 50,000 80,000 85,000
Cash 20,000
Liabilities:
Loan 105,000
What is the value of goodwill, if any?

A. $0
B. $80,000
C. $141,000
D. $86,000
9
39. Earth Ltd acquired Moon Ltd on 1 July 2009 for the sum of $100,000. On the same date Moon Ltd has the
following assets and liabilities:

Assets:
Land 100,000 130,000 150,000
Machinery 50,000 30,000 40,000
Cash 20,000
Liabilities:
Loan 105,000
Contingent liabilities 80,000

A. Not required to recognise goodwill.
B. $35,000
C. $75,000
D. Surplus of $5,000
40. Buster Ltd had purchased goodwill to the value of $100,000 recorded in its consolidated financial
statements. The goodwill has been determined to have an indefinite useful life. However, one year later Buster
Ltd's cash generating units has been determined to have incurred an impairment loss of $13,000. What is the
appropriate action for Buster limited to comply with AASB 138 "Intangible Assets" and AASB 136
"Impairment of Assets"?
A. Write-off goodwill in its entirety as goodwill no longer exists.
B. Recognise impairment loss of $13,000 and credit goodwill.
C. Amortise goodwill for 20 years using straight-line method.
D. Recognise impairment loss of $13,000 and credit equity.
41. The release of AASB 138 has had what impact on the methods of amortising goodwill?
A. The choice to use the inverted sum-of-digits method was phased out over a period of 15 years, to be replaced
by straight-line depreciation.
B. The option to amortise goodwill was removed and replaced with annual impairment testing.
C. Entities were given the option of continuing to amortise goodwill or to subject it to impairment testing each
year.
D. All entities were required to amortise goodwill over 20 years using the straight-line method to allow
comparisons.
10
42. AASB 138 contains some elements that seem to be reactions to opportunistic behaviour by preparers of
accounts and to the degree of uncertainty surrounding goodwill as an unidentifiable intangible asset. These
elements include:
A. The prohibition on recording internally generated goodwill.
B. The requirement to use a specific rate of amortisation.
C. The specification of impairment testing.
D. The prohibition on recording internally generated goodwill and the specification of impairment testing.
43. The argument by Pacific Dunlop (1994) is that the accounting treatment of goodwill, particularly the
requirement to amortise it over 20 years, places Australian companies at a competitive disadvantage
internationally. Miller (1995) analyses this view and argues that:
A. The research that has shown accounting figures to be used in a mechanistic way suggests that Australian
firms will be disadvantaged relative to international competitors in the takeovers market.
B. Sophisticated users will be aware that there are no direct cash-flow effects of the different amortisation
treatments for goodwill. The effect of differential taxation treatments (since the ATO does not permit a
deduction for the amortisation of goodwill) will, however, have a negative impact on Australian companies.
C. The efficient market hypothesis maintains that the capital market will impound accounting information
efficiently into the price of shares. Therefore if Australian companies are required to report lower earnings
through goodwill amortisation they will be valued at a lower amount than they would otherwise be by investors
in the capital market. This would reduce their ability to bid for other companies in a takeover situation.
D. The amortisation of goodwill can be a very significant cost for companies that have purchased a reasonable
number of subsidiaries. Companies that are active in the takeover market in this way will be negatively
impacted by the reporting of lower profits as a result of Australia's requirement that they amortise goodwill over
a maximum of 20 years, whereas other countries permit a 40 year or unlimited life for goodwill.
44. The approach to accounting for intangibles raises some issues because:
A. Assets are now subject to impairment testing, which will remove the professional judgement required for
amortisation.
B. Consistency has now been achieved regarding research and development meaning entities cannot claim to
have expended resources on potential benefits while other entities could not.
C. Many intangible assets will not be recognised under this approach, particularly in regard to internally
generated assets.
D. Intangible assets are more likely to be recorded at fair values because of the active market criteria, which
may overstate asset values.
11
45. Prior to the introduction of AASB 138 companies had found ways to circumvent the requirements of the
revised (1996) version of AASB 1013. These methods included.
A. Using the inverted sum-of-digits amortisation technique.
B. Calculating goodwill as the difference between the carrying value of the net assets of the acquired company
and the consideration paid.
C. Requiring the purchased company to make excessive provisions for restructuring costs to be undertaken after
the company is purchased.
D. Attributing the excess of the cost of acquisition over the fair value of the net identifiable assets of the
company acquired to brands, licences and other identifiable intangible assets.
46. Prior to the introduction of impairment testing companies had attempted to manipulate their accounts
through amortisation:
A. Because where managers were rewarded based on profits attained it was in their best interests to reduce
expenses while they held that position.
B. Because contractual arrangements such as debt covenants often required asset values to be maximised.
C. Recording higher amortisation expenses allowed profits to be reduced, thus allowing tax payments to be
minimised without any cash outflows.
D. Because where managers were rewarded based on profits attained it was in their best interests to reduce
expenses while they held that position; and because contractual arrangements such as debt covenants often
required asset values to be maximised.
47. During 2001 the Financial Accounting Standards Board in the United States indicated they would look to
change a requirement for the treatment of goodwill. That change is:
A. To remove the requirement to amortise goodwill and replace it with a requirement to write-down goodwill to
reflect any impairment in value.
B. To allow the recognition of internally generated goodwill.
C. To extend the period over which goodwill may be amortised.
D. To allow the inverted sum-of-digits method of amortisation.
48. Big Ltd has purchased 100 per cent of Little Ltd for a cash payment of $800,000. The additional costs to Big
Ltd to complete the purchase were $3,000. An extract from the balance sheet for Little Ltd at the date of
acquisition shows:
$ $
12
Assets
Current assets
Cash 12,000
Net accounts receivable 25,000
Inventory 80,000
Total current assets 117,000
Non-current assets
Land and buildings (net) 200,000
Vehicles (net) 90,000
Equipment (net) 157,000
Total non-current assets 447,000
Total assets 564,000
Liabilities
Accounts payable 8,000
Loan 100,000
Total liabilities 108,000
Net assets 456,000
Additional information:
The assets and liabilities of Little Ltd are stated at fair value except that:
land and buildings have a fair value of $300,000
accounts receivable have a fair value of $20,000
Little owns a licence that has not been recorded in the accounts. Its fair value is $150,000.
What is the amount of purchased goodwill, if any, that has been acquired by Big Ltd?
A. $242,000
B. $344,000
C. $252,000
D. $102,000
49. As part of adopting IFRS, goodwill acquired in a business combination is no longer amortised. Instead, the
acquirer shall test goodwill for impairment (AASB 3 "Business Combinations"). When is goodwill considered
to be impaired?
A. If the recoverable amount of the cash generating unit is greater than the unit's carrying amount.
B. If the recoverable amount of the cash generating unit is less than the unit's carrying amount.
C. If the value in use of the cash generating unit is greater than the unit's carrying amount.
D. If the fair value less costs to sell is greater than the unit's carrying amount.
13
50. Which of the following statement(s) in regard to goodwill is/are correct in accordance with AASB 136
A. An impairment loss must be recognised when the carrying amount of a cash-generating unit exceeds it
recoverable amount.
B. An impairment loss recognised may be reversed in subsequent period.
C. Value in use is the present value of future cash flows expected to be derived from a cash-generating unit.
D. All of the given answers.
E. An impairment loss must be recognised when the carrying amount of a cash-generating unit exceeds it
recoverable amount and an impairment loss recognised may be reversed in subsequent period.
51. Which of the following statements in regard to goodwill is/are correct in accordance with AASB 136
A. Goodwill may be amortised when it has a finite life.
B. Goodwill is subjected to impairment testing every three years.
C. Upward revaluation of goodwill is permitted as long as it is a reversal of prior years' impairment losses.
52. After initial recognition, the acquirer shall recognise goodwill at:
A. Historical cost.
B. Fair value.
C. Cost less accumulated amortisation.
D. Cost less accumulated impairment losses.
53. Which of the following intangible assets should be recognised in the balance sheet?
A. Internally generated goodwill in excess of recoverable amount.
B. Licenses with active market.
C. Purchased trademark.
E. Licenses with active market and purchased trademark.
14
54. Which of the following combination best demonstrates the value of goodwill?
I. Purchase consideration of subsidiary
II. Book Value of net assets held by subsidiary
III. Fair value of net identifiable assets
IV. Contingent liabilities
A. I less II
B. I less III
C. I less (II-IV)
D. I less (III-IV)
55. Broadbeach Ltd is a manufacturing company with three subsidiaries. The following information relates to
the goodwill account of Broadbeach Ltd for the year ended 30 June 2009:
(in dollars) Goodwill Accumulated impairment loss Carrying amount of CGU Recoverable amount ofCGU
Mantra Ltd 50,000 10,000 250,000 270,000
Oceania Ltd 40,000 NIL 310,000 250,000
Wave Ltd 60,000 NIL 450,000 600,000
In accordance with AASB 136, what is the net effect of above goodwill accounts on the income statement and balance sheet of Broadbeach Ltd?
Income Statement Balance Sheet
A. Increase Increase
B. Decrease Decrease
C. Increase Decrease
D. Decrease Increase
Ans: B
56. Broadbeach Ltd is a manufacturing company with three subsidiaries. The following information relates to
the goodwill account of Broadbeach Ltd for the year ended 30 June 2009:
(in dollars) Goodwill Accumulated impairment loss Carrying amount of CGU Recoverable amount ofCGU
Mantra Ltd 50,000 10,000 250,000 270,000
Oceania Ltd 40,000 NIL 310,000 250,000
Wave Ltd 60,000 NIL 450,000 600,000
What is the carrying amount of goodwill as at 30 June 2009 consistent with AASB 136 "Impairment of Assets"?
A. Zero
B. $100 000
C. S140 000
D. $150 000
15
57. Which of the following statements is correct with respect to intangible assets?
A. Internally generated publishing titles may be revalued if fair value is determined by reference to an active
market.
B. Purchased goodwill should be amortised over a period of twenty years.
C. Internally generated brands are not recognized as intangible assets because expenditures in these assets are
not distinguishable from the cost of developing the business as a whole.
D. Internally generated brands are recognized as intangible assets because expenditures in these assets are not
distinguishable from the cost of developing the business as a whole.
58. Which of the following expenses are likely to satisfy the definition of an asset, and hence may be capitalised
as an intangible asset?
A. Expenses incurred to develop a brand name;
B. Advertising expenses
C. Research expenses
D. None of the given answers.
59. Palm Beach Ltd has a cash generating unit (CGU) and has been assessed for impairment and it has
determined an impairment loss of $100,000.
The following information relates to the assets as at 30 June 2012.
Carrying Amount RecoverableAmount

Buildings 800 000 900 000
Equipment 200 000 150 000
Goodwill 50 000
In accordance with AASB 136 "Impairment of Assets" what should be the carrying amount of buildings as at 30 June 2012?
A. $720,000
B. $760,000
C. $800,000
D. $900 000
16
60. In accordance with AASB 136 "Impairment of Assets" what should be the carrying amount of equipment as
at 30 June 2012?
A. $0
B. $100,000
C. $150,000
D. $190,000
61. Shelley Beach Ltd has one cash generating unit (CGU) and it has been determined that the CGU has
incurred an impairment loss of $80,000 for the year ended 30 June 2012.
The carrying amounts of the assets as at 30 June 2012 are as follows:
Carrying Amount
Buildings $300 000
Equipment 300 000
Goodwill 20 000
Total $620 000
In accordance with AASB 136 "Impairment of Assets", what should be the carrying amounts for buildings, equipment and goodwill as at 30 June
2012, respectively?
A. $240 000; $300 000; $0;
B. $260 000; $260 000; $20 000;
C. $270 000; $270 000; $0;
D. $300 000; $300 000; $20 000;
62. Shelley Beach Ltd has one cash generating unit (CGU) and it has been determined that the CGU has
incurred an impairment loss of $80,000 for the year ended 30 June 2012.
The carrying amounts of the assets as at 30 June 2012 are as follows:
Carrying Amount
Buildings $300 000
Equipment 300 000
Goodwill 20 000
Total $620 000
In accordance with AASB 136 "Impairment of Assets", what is the appropriate journal entry to recognize the impairment loss for Shelley Beach
Ltd?
A.
Dr Impairment loss 80 000
Cr Accumulated impairment loss -Buildings 30 000
Cr Accumulated impairment loss -Equipment 30 000
Cr Accumulated impairment loss -Goodwill 20 000
17
B.
Dr Impairment loss – Identifiable intangible assets 80 000
C.
Dr Impairment loss – Identifiable intangible assets 60 000
Dr Impairment loss – Goodwill 20 000
Cr Accumulated impairment loss -Goodwill 20 000
D.
Dr Impairment loss 80 000
Cr Buildings 30 000
Cr Equipment 30 000
Cr Goodwill 20 000
63. Discuss the benefits of subjecting goodwill to impairment testing as opposed to amortisation. In your
answer, consider the relevance and reliability qualitative characteristics of financial information.
64. Explain how AASB 138 "Intangible assets" may disadvantage Australian start-up companies with heavy
research and development activities. Contrast this with US start-up companies.
18
65. Outline the requirements of AASB 138 on recognition and measurement of research and development
activities.
66. Discuss the considerations outlined in AASB 138 on revaluation of intangible assets. What are the
implications of this standard on the relevance of financial information?
67. Discuss the factors considered to determine amortisation of deferred development costs.
68. Explain why research expenditures and expenditures on internally generated such as, brands, mastheads and
publishing titles are not capitalised regardless of whether they are likely to generate future economic benefits.
19
69. Explain why intangible assets are required to be reported as a separate class of asset in the statement of
financial position.
70. Discuss the implications of the 2007 global financial crisis on the valuation of intangibles.
20
08 Key
1. Intangible assets that are amortised are no longer subjected to impairment testing.
FALSE
Deegan - Chapter 08 #1
difficulty: EMPTY
learning goal: EMPTY
learning objective: EMPTY
level: EMPTY
lo: EMPTY
question type: EMPTY
source: EMPTY
type: EMPTY
2. Research of market potential prior to the launch of a product is permissible to be capitalised as an intangible
asset.
FALSE
difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
3. Internally generated brands, mastheads, publishing titles and customer lists are permitted to be recognised as
intangible assets.
FALSE
difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
1
4. AASB 138 permits the use of revaluation model for intangible assets if there is an active market to determine
fair value.
TRUE
difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
5. The revaluation model requires all intangible assets in the same class to have a fair value determined by
reference to an active market.
TRUE
difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
6. If the fair value of a revalued intangible asset can no longer be determined by reference to an active market,
AASB 136 requires the use of the cost model.
FALSE
difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
2
7. Internally generated identifiable intangible assets may be recognised for financial accounting purposes in
Australia.
TRUE
difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
8. Goodwill is a term used for the composite asset of identifiable intangibles:

FALSE
difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
9. There are only rare occasions when an identifiable intangible asset should be amortised.
FALSE
difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
3
10. International convergence has meant that there is no longer one specific standard related to intangibles:
FALSE

difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
11. Development costs are less likely to meet the test for deferral than research costs:
FALSE

difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
12. Compared to the requirement in the US, the treatment of research and development costs in Australia is less
conservative (that is, likely to result in higher profits):
TRUE

difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
4
13. AASB 138 requires that all intangibles, whether purchased or internally generated, be capitalised.
FALSE

difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
14. Continuously Contemporary Accounting emphasises an entity's ability to adapt. Therefore goodwill is
considered an important asset in this model:
FALSE

difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
15. Intangible assets without a limited useful life cannot be recorded under AASB 138 as they cannot be
amortised.
FALSE

difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
5
16. According to AASB 138 on intangible assets, if an entity buys another entity separate values can be
assigned to purchased goodwill and to a brand name:
TRUE

difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
17. Expenditure on an intangible asset that was initially expensed may be recognised as part of an intangible
asset at a later date.
FALSE

difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
18. AASB 138 prohibits the recognition of intangible assets using the revaluation model.
FALSE

difficulty: EMPTY
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
6
19. Identifiable intangible assets are those intangible assets that:
A. Have been purchased by the entity from external parties.
B. Have an unlimited life.
C. Can have a value placed on them separately from other assets of the entity.
D. Cannot be separately sold.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
20. Examples of intangible assets include:

A. Loyal customers.
B. Patents and trademarks.
C. Provisions.
D. Loyal customers, patents and trademarks.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
7
21. Examples of elements of a business that commonly make up goodwill are:
A. Patents and licences.
B. Trademarks and brand names.
C. Research and development.
D. Established reputation and loyal customers.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
22. Because intangible assets have no physical form:

A. They are not subject to the recognition criteria of other assets and may be recorded if they satisfy the three
elements of the definition.
B. They must be expensed immediately as assets must be able to be measured.
C. They have no real value and should be excluded from accounting reports.
D. They cannot be sold separately and must all be classified as unidentifiable.

Difficulty: Fairly easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
8
23. An intangible asset may be recorded.
A. If acquired from an external party at a cost.
B. If it is internally generated and fits the definition of an asset and meets the associated recognition criteria.
C. At a value other than cost if that value more reliably records the worth of the intangible asset.
D. At the cost of the asset, which must exclude any additional expenditure required to prepare the asset for use.
E. If acquired from an external party at a cost, and at the cost of the asset, which must exclude any additional
expenditure required to prepare the asset for use.

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
24. In order to determine whether or not expenditure should be treated as an intangible asset, the relevant test to
apply in Australia is:
A. It should be recognised when (a) it is definite that future economic benefits will eventuate or (b) the asset
possesses a cost or other value that can be measured reliably.
B. It should be recognised if (a) the expenditure is with an external party in an arm's length transaction for a
separately identifiable intangible asset or (b) the intangible asset arises as the difference between the net
tangible assets of an entity and the price paid for that entity.
C. It should be recognised if (a) it is part of a specified plan by management to develop and maintain a
separately identifiable asset or (b) the intangible asset was purchased in an arm's length transaction and is
actively traded in a market.
D. It should be recognised when and only when (a) it is probable that future economic benefits will eventuate
and (b) the asset possesses a cost or other value that can be measured reliably.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
9
25. AASB 138 states that intangible assets:
A. May not be revalued and must be amortised over their useful lives.
B. Are only able to be revalued if they have been internally generated and there is an active market for them.
C. May only be revalued to their fair value as assessed by a licensed valuer.
D. may be measured by using either the cost model or the revaluation model.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
26. AASB 138 defines development as:

A. The activities undertaken with specific commercial objectives, including original research, to develop plans
or designs for new products or significant improvements to existing products.
B. The application of research findings or other knowledge to a plan or design for the production of new or
substantially improved material, devices, processes, systems or services prior to the commencement of
commercial production or use.
C. The activities undertaken to translate research findings into feasible projects for subsequent development for
commercial objectives such that the recoverable amount is expected to be greater than the cost.
D. The activities undertaken with the expectation by management that future economic benefits in the form of
new products or improvements to existing products are likely to result, based on research completed to date.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
10
27. What is the test for deferral of research costs as required by AASB 138?
A. Research costs can be deferred (recorded as an asset) when it is probable that the project they are applied to
will bring future economic benefits.
B. Research costs may not be deferred unless it is almost certain that the project they are applied to will bring
future economic benefits.
C. Research costs may not be recorded as an intangible asset.
D. Research costs may be deferred if the entity can demonstrate that an intangible asset exists and that it will
generate future economic benefits.
E. Research costs may be recorded as an intangible asset if the company intends to develop the product further.

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
28. Which of the following statements is correct with respect to research and development expenditures in
accordance with AASB 138?
A. Activities aimed at obtaining knowledge that is likely to produce a viable commercial product can be
capitalised.
B. Formulation, design, evaluation and final selection of alternative materials to be used in producing a viable
commercial product can be capitalised.
C. Design, construction and operation of a pilot plant that is not of a scale economically feasible for commercial
production can be capitalised.
D. Search for, evaluation and final selection of, applications of research findings and other knowledge can be
capitalised.

Difficulty: Moderate
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
11
29. The requirement of AASB 138 in relation to the amortisation of development cost is that:
A. It is to be amortised straight-line over a period not greater than 20 years.
B. It is to be amortised from the time of deferral so as to match the cost to the related benefits.
C. It is to be amortised using an accelerated depreciation rate over a period not exceeding 10 years.
D. It is to be amortised from the time the asset is available for use and shall reflect the consumption of the
economic benefits by the entity.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
30. Glass 4 Windows is involved in a research and development project to create a filtering window that
removes the need for curtains. For the current year ended 30 June 2004 expenditure on the project is as follows:
Research $235,000
The window is expected to earn revenues of $70,000 per year for the 10 years commencing 1 July 2004. Assuming straight-line amortisation, how
much of the research and development cost should be expensed this period and what amount should be amortised in the year ended 30 June 2007?
A. Expensed in 2004: $58,500 Amortisation in 2007: $58,500
D. Expensed in 2004: $350,000 Amortisation in 2007: $23,500

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
12
31. Walking on Air is developing a new form of individual transport that will act like a personal hovercraft.
Costs for the year ended 30 June 2004 are:
Research $950,000
Due to the high individual cost of items sales of this 'prototype' model will be small and generate $100,000 per year over the next 4 years. Following
that time, a new and cheaper consumer model will be under production based on the research developed for the prototype; however, it will require
additional development expenditure. How much of the research and development cost should be expensed in the period ended 30 June 2004 and what
amount should be amortised in the year ended 30 June 2006 (rounded to the nearest dollar)?
A. Expensed in 2004: $1 200,000 Amortisation in 2006: $100,000
D. Expensed in 2004: $1,200,000 Amortisation in 2006: $30,000
E. Expensed in 2004: $160,000 Amortisation in 2006: $160,000

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
32. There is a concern that research and development may be reduced as a result of the new requirements in
AASB 138 because:
A. Companies will not have the cash available to pay for the research expenses up-front.
B. Recognising expenses early will allow for larger profits later, which will help smaller firms.
C. The 'horizon problem' suggests managers will not invest in long-term projects that do not immediately
increase profits.
D. Shareholders are only interested in short-term profits and will not be impressed by strategies that attempt to
increase the long-term value of their shares.

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
13
33. Castle Co Ltd is working on three research projects. Project Jonah is government-sponsored research on
synthesising currently available research results on the possible triggers of asthma attacks. Project Beta involves
researching the genetic tags associated with heart disease based on the genome project. A test to identify the
predisposition to heart disease in children has been developed and will be on the market in 2003. Since 2001
research and development expenditures on this project are applied development costs only. Project Sigma is
cutting edge research being conducted to try and discover a means of 'disassembling' molecules and then
'reassembling' them in their original form. The company hopes that this work will lay the basis for future
dreams of teleportation as a method of transport. Details of expenditures and recoverable amounts expected
beyond a reasonable doubt at this time are:
Actual Budget
$000 $000
Project 2001 2002 2003 2004
Jonah
Beta
Sigma
What is the total research and development deferral for each project as at the end of the year 2002?
A. Jonah: $15,000 Beta. $90,000 Sigma. $0
B. Jonah: $20,000 Beta. $50,000 Sigma. $30,000
C. Jonah: $15,000 Beta. $70,000 Sigma. $50,000
D. Jonah: $0 Beta. $90,000 Sigma. $0

Difficulty: Difficult
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
14
34. Serendipity Ltd is working on two independent research and development projects. Project A has recently
been fruitful and the resulting product has been marketed, unfortunately with limited success. Development of
the product is continuing in an effort to improve its marketability. Project B is due for product release in one
year's time. The initial marketing surveys and forward contracts suggest that the outcome for this product is
very favourable. The following information relates to the expenditures for the current period and budgeted
figures for the next 3 years. All research costs in prior periods were expensed. The budgeted figures are
considered accurate beyond a reasonable doubt.
Actual $000 Budg

et
$000
Project 2003 2004 2005 2006
A
Research 12 0 0 0
B
Research 41 0 0 0
What is the research and development deferral for each project in 2003?
A. Project A. $5,000 Project B. $0
B. Project A. $47,000 Project B. $131,000
C. Project A. $30,000 Project B. $90,000
D. Project A. $62,000 Project B. $131,000

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
15
35. AASB 138 describes the distinction between the treatment of internally generated goodwill and purchased
goodwill (as well as other intangibles) as arising because:
A. The two different sources of goodwill result in two different types of asset.
B. Internally generated goodwill is developed in order to be sold, so its value will be recognised at that time.
C. Internally generated goodwill cannot be reliably measured.
D. Recording purchased goodwill could lead to the manipulation of profit and asset amounts.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
36. The treatment of internally generated goodwill varies from purchased goodwill under AASB 138 in that:
A. Purchased goodwill is not amortised whereas internally generated goodwill is assumed to be maintained
indefinitely.
B. Purchased goodwill may be recorded as an asset, whereas internally generated goodwill may not.
C. Internally generated goodwill is to be amortised over a period of no greater than 20 years, whereas purchased
goodwill may not be recorded.
D. Purchased goodwill is to be expensed in the period it is bought whereas internally generated goodwill is to be
deferred and amortised over a period of no less than 20 years.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
16
37. Purchased goodwill is recognised as the amount of:
A. The excess of the cost of acquisition incurred by an acquirer over the fair value of the identifiable net assets
acquired.
B. The difference between the cost of acquisition of a subsidiary and the realisable value of net assets of the
subsidiary.
C. The lower of the sum of related expenditures on advertising and promotion undertaken in the last 2 years by
the subsidiary being purchased and the independent valuation of the market value of that subsidiary's goodwill.
D. The excess of the cost of acquisition of another entity by an acquiring entity over the recoverable value of
the identifiable net assets acquired.
E. The excess of the cost of acquisition incurred by an acquirer over the fair value of the identifiable net assets
and contingent liabilities acquired.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
38. Far-flung Co Ltd purchases Local Co Ltd for the purchase consideration of:
Cash $100,000
Shares in Far-flung Co Ltd 50,000 shares with a market value of $1.60
Land Carrying value of $90,000Fair value of $100,000
Far-flung incurred legal fees of $6,000 to complete the acquisition. Local Co Ltd had the following assets and liabilities at the time of the purchase:
17
Assets:
Land 100,000 150,000 200,000
Machinery 50,000 80,000 85,000
Cash 20,000
Liabilities:
Loan 105,000

A. $0
B. $80,000
C. $141,000
D. $86,000

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
39. Earth Ltd acquired Moon Ltd on 1 July 2009 for the sum of $100,000. On the same date Moon Ltd has the
following assets and liabilities:
18
Assets:
Land 100,000 130,000 150,000
Machinery 50,000 30,000 40,000
Cash 20,000
Liabilities:
Loan 105,000
Contingent liabilities 80,000

A. Not required to recognise goodwill.
B. $35,000
C. $75,000
D. Surplus of $5,000

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
40. Buster Ltd had purchased goodwill to the value of $100,000 recorded in its consolidated financial
statements. The goodwill has been determined to have an indefinite useful life. However, one year later Buster
Ltd's cash generating units has been determined to have incurred an impairment loss of $13,000. What is the
appropriate action for Buster limited to comply with AASB 138 "Intangible Assets" and AASB 136
A. Write-off goodwill in its entirety as goodwill no longer exists.
B. Recognise impairment loss of $13,000 and credit goodwill.
C. Amortise goodwill for 20 years using straight-line method.
D. Recognise impairment loss of $13,000 and credit equity.

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
19
41. The release of AASB 138 has had what impact on the methods of amortising goodwill?
A. The choice to use the inverted sum-of-digits method was phased out over a period of 15 years, to be replaced
by straight-line depreciation.
B. The option to amortise goodwill was removed and replaced with annual impairment testing.
C. Entities were given the option of continuing to amortise goodwill or to subject it to impairment testing each
year.
D. All entities were required to amortise goodwill over 20 years using the straight-line method to allow
comparisons.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
42. AASB 138 contains some elements that seem to be reactions to opportunistic behaviour by preparers of
accounts and to the degree of uncertainty surrounding goodwill as an unidentifiable intangible asset. These
elements include:
A. The prohibition on recording internally generated goodwill.
B. The requirement to use a specific rate of amortisation.
C. The specification of impairment testing.
D. The prohibition on recording internally generated goodwill and the specification of impairment testing.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
20
43. The argument by Pacific Dunlop (1994) is that the accounting treatment of goodwill, particularly the
requirement to amortise it over 20 years, places Australian companies at a competitive disadvantage
internationally. Miller (1995) analyses this view and argues that:
A. The research that has shown accounting figures to be used in a mechanistic way suggests that Australian
firms will be disadvantaged relative to international competitors in the takeovers market.
B. Sophisticated users will be aware that there are no direct cash-flow effects of the different amortisation
treatments for goodwill. The effect of differential taxation treatments (since the ATO does not permit a
deduction for the amortisation of goodwill) will, however, have a negative impact on Australian companies.
C. The efficient market hypothesis maintains that the capital market will impound accounting information
efficiently into the price of shares. Therefore if Australian companies are required to report lower earnings
through goodwill amortisation they will be valued at a lower amount than they would otherwise be by investors
in the capital market. This would reduce their ability to bid for other companies in a takeover situation.
D. The amortisation of goodwill can be a very significant cost for companies that have purchased a reasonable
number of subsidiaries. Companies that are active in the takeover market in this way will be negatively
impacted by the reporting of lower profits as a result of Australia's requirement that they amortise goodwill over
a maximum of 20 years, whereas other countries permit a 40 year or unlimited life for goodwill.

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
21
44. The approach to accounting for intangibles raises some issues because:
A. Assets are now subject to impairment testing, which will remove the professional judgement required for
amortisation.
B. Consistency has now been achieved regarding research and development meaning entities cannot claim to
have expended resources on potential benefits while other entities could not.
C. Many intangible assets will not be recognised under this approach, particularly in regard to internally
generated assets.
D. Intangible assets are more likely to be recorded at fair values because of the active market criteria, which
may overstate asset values.

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
45. Prior to the introduction of AASB 138 companies had found ways to circumvent the requirements of the
revised (1996) version of AASB 1013. These methods included.
A. Using the inverted sum-of-digits amortisation technique.
B. Calculating goodwill as the difference between the carrying value of the net assets of the acquired company
and the consideration paid.
C. Requiring the purchased company to make excessive provisions for restructuring costs to be undertaken after
the company is purchased.
D. Attributing the excess of the cost of acquisition over the fair value of the net identifiable assets of the
company acquired to brands, licences and other identifiable intangible assets.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
22
46. Prior to the introduction of impairment testing companies had attempted to manipulate their accounts
through amortisation:
A. Because where managers were rewarded based on profits attained it was in their best interests to reduce
expenses while they held that position.
B. Because contractual arrangements such as debt covenants often required asset values to be maximised.
C. Recording higher amortisation expenses allowed profits to be reduced, thus allowing tax payments to be
minimised without any cash outflows.
D. Because where managers were rewarded based on profits attained it was in their best interests to reduce
expenses while they held that position; and because contractual arrangements such as debt covenants often
required asset values to be maximised.

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
47. During 2001 the Financial Accounting Standards Board in the United States indicated they would look to
change a requirement for the treatment of goodwill. That change is:
A. To remove the requirement to amortise goodwill and replace it with a requirement to write-down goodwill to
reflect any impairment in value.
B. To allow the recognition of internally generated goodwill.
C. To extend the period over which goodwill may be amortised.
D. To allow the inverted sum-of-digits method of amortisation.

Difficulty: Easy
level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
48. Big Ltd has purchased 100 per cent of Little Ltd for a cash payment of $800,000. The additional costs to Big
Ltd to complete the purchase were $3,000. An extract from the balance sheet for Little Ltd at the date of
acquisition shows:
$ $
23
Assets
Current assets
Cash 12,000
Net accounts receivable 25,000
Inventory 80,000
Total current assets 117,000
Non-current assets
Land and buildings (net) 200,000
Vehicles (net) 90,000
Equipment (net) 157,000
Total non-current assets 447,000
Total assets 564,000
Liabilities
Accounts payable 8,000
Loan 100,000
Total liabilities 108,000
Net assets 456,000
Additional information:
The assets and liabilities of Little Ltd are stated at fair value except that:
land and buildings have a fair value of $300,000
accounts receivable have a fair value of $20,000
Little owns a licence that has not been recorded in the accounts. Its fair value is $150,000.
What is the amount of purchased goodwill, if any, that has been acquired by Big Ltd?
A. $242,000
B. $344,000
C. $252,000
D. $102,000

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
24
49. As part of adopting IFRS, goodwill acquired in a business combination is no longer amortised. Instead, the
acquirer shall test goodwill for impairment (AASB 3 "Business Combinations"). When is goodwill considered
to be impaired?
A. If the recoverable amount of the cash generating unit is greater than the unit's carrying amount.
B. If the recoverable amount of the cash generating unit is less than the unit's carrying amount.
C. If the value in use of the cash generating unit is greater than the unit's carrying amount.
D. If the fair value less costs to sell is greater than the unit's carrying amount.

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
50. Which of the following statement(s) in regard to goodwill is/are correct in accordance with AASB 136
A. An impairment loss must be recognised when the carrying amount of a cash-generating unit exceeds it
recoverable amount.
B. An impairment loss recognised may be reversed in subsequent period.
C. Value in use is the present value of future cash flows expected to be derived from a cash-generating unit.
E. An impairment loss must be recognised when the carrying amount of a cash-generating unit exceeds it
recoverable amount and an impairment loss recognised may be reversed in subsequent period.

level: EMPTY
lo: EMPTY
source: EMPTY
type: EMPTY
25
Another random document with
no related content on Scribd:
The peculiar habits of the Hepialidae are not likely to bring the
Insects to the net of the ordinary collector, and we believe they never
fly to light, hence it is probable that we are acquainted with only a
small portion of the existing species; their distribution is very wide,
but Australia seems to be their metropolis, and in New Zealand
twelve species are known. The genera as at present accepted are
remarkable for their wide distribution. Leto is said to occur in South
Africa and in the Fiji Islands; but we must repeat that the study of
these interesting Insects is in a very primitive state, and our present
knowledge of their distribution may be somewhat misleading.
The habits of the European Hepialus in courtship have been

observed to a considerable extent and are of great interest, an
astonishing variety and a profound distinction in the methods by
which the sexes are brought together having been revealed.
H. humuli, our Ghost-moth, is the most peculiar. Its habits were

detected by Dr. Chapman.[285] The male is an Insect of exceptional
colour, being white above, in consequence of a dense formation of
imperfect scales; the female is of the brownish tints usual in Swift-
moths. In the month of June the male selects a spot where he is
conspicuous, and hovers persistently there for a period of about
twenty minutes in the twilight; his colour has a silvery-white,
glistening appearance, so that the Insect is really conspicuous
notwithstanding the advanced hour. Females may be detected
hovering in a somewhat similar manner, but are not conspicuous like
the male, their colour being obscure; while so hovering they are
ovipositing, dropping the eggs amongst the grass. Females that
have not been fertilised move very differently and dash about in an
erratic manner till they see a male; they apparently have no better
means of informing the hovering male of their presence than by
buzzing near, or colliding with him. Immediately this is done, the
male abandons his hovering, and coupling occurs. There can be little
doubt that the colour of the male attracts the female; but there is a
variety, hethlandica, of the former sex coloured much like the female,
and in some localities varieties of this sort are very prevalent, though
in others the species is quite constant. This variation in the colour of
the males is very great in Shetland,[286] some being quite like the
females. In H. hectus the two sexes are inconspicuously and
similarly coloured. The male hovers in the afternoon or evening in a
protected spot, and while doing so diffuses an agreeable odour—
said by Barrett to be like pine-apple—and this brings the female to
him, much in the same manner as the colour of H. humuli brings its
female. The hind legs of the male are swollen, being filled with
glands for secreting the odorous matter.[287] This structure has led to
the suggestion of the generic name Phymatopus for the Insect.
Turning to other species of the genus, we find that the normal
relative rôles of the sexes are exhibited, but with considerable
diversity in the species. In H. lupulinus the males fly about with
rapidity, while the female sits on a stem and vibrates her wings; she
thus attracts the males, but they do not perceive her unless
happening to come within three or four feet, when they become
aware of her proximity, search for and find her. It is doubtful whether
the attraction is in this case the result of an odour; it would appear
more probable that it may be sound, or that the vibration of the wings
may be felt by the male.
In H. sylvinus, H. velleda and H. pyrenaicus less abnormal modes of

attracting the males occur, the individuals of this latter sex
assembling in great numbers at a spot where there is a female. In
the first of the three species mentioned the female sits in the twilight
on the stem of some plant and vibrates the wings with rapidity; she
does not fly; indeed, according to Mr. Robson, she does not till after
fertilisation move from the spot where she emerged. In H. pyrenaicus
the female is quite apterous, but is very attractive to the males,
which as we have said, assemble in large numbers near her. Thus
within the limits of these few allied forms we find radically different
relations of the sexes.
1. The male attracts the female—(A) by sight (H. humuli); (B) by

odour (H. hectus).
2. The female attracts the male—(A) by vibration of wings (H.
lupulinus and H. sylvinus); (B) without vibration, but by some
means acting at a distance (H. velleda, H. pyrenaicus).
Little or nothing is known as to the habits of the great majority of the

more remarkable forms of the family. The gigantic Australian forms
are believed to be scarcely ever seen on the wing.
The Hepialidae differ from other Lepidoptera by very important

anatomical characters. The absence of most of the mouth-parts is a
character common to them and several other divisions of
Lepidoptera; but the labial palpi are peculiarly formed in this family,
being short and the greater portion of their length consisting of an
undivided base, which probably represents some part of the labium
that is membranous in normal Lepidoptera. The thoracic segments
are remarkably simple, the three differing less from one another than
usual, and both meso- and meta-notum being much less infolded
and co-ordinated. The wings are remarkable for the similarity of the
nervuration of the front and hind wings, and by the cell being divided
by longitudinal nervules so as to form three or four cells. On the
inner margin of the front wing there is near the base an incision
marking off a small prominent lobe, the jugum of Prof. Comstock.
Brandt mentions the following anatomical peculiarities,[288] viz. the
anterior part of the alimentary canal is comparatively simple; the
respiratory system is in some points like that of the larva; the heart is
composed of eight chambers; the appendicular glands of the female
genitalia are wanting. The testes remain separate organs throughout
life. The chain of nerve ganglia consists of the supra- and infra-
oesophageal, three thoracic, and five abdominal, ganglia, while other
Lepidoptera have four abdominal.
Fam. 24. Callidulidae.—A small family of light-bodied diurnal moths

having a great resemblance to butterflies. In some the frenulum is
present in a very rudimentary condition, and in others it is apparently
absent. Cleosiris and Pterodecta are very like butterflies of the
Lycaenid genus Thecla. Although fifty species and seven or eight
genera are known, we are quite ignorant of the metamorphoses.
Most of the species are found in the islands of the Malay
Archipelago, but there are a few in East India.
Fam. 25. Drepanidae (or Drepanulidae). (Hook-tips).—The larger

moths of this family are of moderate size; many of the species have
the apex of the front wing pointed or even hooked; some have very
much the appearance of Geometrid moths; they resemble very
different members of that family. Oreta hyalodisca is remarkable on
account of the very large, transparent patch on each front wing,
though the other species of the genus have nothing of the sort. In the
genus Deroca we find Insects with the scales imperfect, they being
few and small and approximating in form to hairs; in D. hyalina
scales are nearly entirely absent. In other genera, e.g. Peridrepana,
Streptoperas, there is only a very inferior state of scale-formation.
The few larvae that are known are peculiar; they are nearly bare of
hair, without the pair of terminal claspers, while the body is
terminated by a long tubular process. They form a slight cocoon
among leaves.
The members of the family were formerly much misunderstood, and

were assigned to various positions in the Order. There are now
about 30 genera, and 150 species known, the geographical
distribution of the family being very wide. In Britain we have half a
dozen species. Cilix glaucata (better known as C. spinula) is said "to
undoubtedly imitate" the excrement of birds. No doubt the Insect
resembles that substance so as to be readily mistaken for it. This
Insect has a very wide distribution in North America, Europe and
East India, and is said to vary so much in the structure of its organs
as to justify us in saying that the one species belongs to two or three
genera.
Fig. 199—Mature larva of Apoda testudo, on beech-leaf. Britain.

Fam. 26. Limacodidae (or Eucleidae).—These are somewhat small
moths, of stout formation, sometimes very short in the body, and with
rather small wing-area. The family includes however at present many
Insects of diverse appearance; there are numerous forms in which
apple-green is a prominent colour; some bear a certain resemblance
to the Swifts, others to Noctuids; some, Rosema and Staetherinia,
are of extraordinary shapes; certain very small forms, Gavara,
Ceratonema, resemble Tortricids or Tineids; a few even remind one
of Insects of other Orders; so that the group is a mimetic one.
Nagoda nigricans (Ceylon) has the male somewhat like a Psychid,
while the female has a different system of coloration and wing-form.
In Scopelodes the palpi are in both sexes remarkable; elongated,
stiff, directed upwards and brush-like at the tip. Altogether there are
about 100 genera and 400 species known; the distribution of the
family is very wide in both hemispheres, but these Insects do not
occur in insular faunas. In Britain we have two genera, Heterogenea
and Apoda (better known as Limacodes[289]), each with a single
species.
Fig. 200—Larva of Apoda testudo just hatched. A, Dorsal view of larva;

B, C, D, a spine in different states of evagination. All magnified.
(After Chapman.)
The early stages of these Insects are of great interest. The eggs, so
far as known, are peculiar flat oval scales, of irregular outline and
transparent; we have figured an example in Vol. V. Fig. 83. The eggs
of the same moth are said to vary much in size, though the larvae
that emerge from them differ little from one another in this respect.
The latter are peculiar, inasmuch as they have no abdominal feet,
and the thoracic legs are but small; hence the caterpillars move in an
imperceptible gliding manner that has suggested for some of them
the name of slug-worms. The metamorphoses of a few are known.
They may be arranged in two groups; one in which the larva is
spinose or armed with a series of projections and appendages
persisting throughout life; while in the members of the second group
the spines have only a temporary existence. At the moment the
young larva of Apoda testudo emerges from the egg it has no
conspicuous spines or processes, and is an extremely soft,
colourless creature,[290] but it almost immediately displays a
remarkable system of complex spines. These really exist in the larva
when it is hatched, and are thrust out from pits, as explained by Dr.
Chapman. In the succeeding stages, the spines become modified in
form, and the colour of the body and the nature of the integument
are much changed, so that in the adult larva (Fig. 199) the spines
have subsided into the condition of mere prominences, different in
colour from the rest of the surface. These larvae appear to be
destitute of a head, but there really exists a large one which is
retracted, except during feeding, into the body; the five pairs of
abdominal feet of the larvae of allied families are replaced by sucker-
like structures on the first eight abdominal segments. The spinneret
of the mouth is not a pointed tubular organ, but is fish-tailed in
shape, and hence disposes the silky matter, that aids the larva in
moving on the leaves, in the form of a ribbon instead of that of a
thread. It has been stated that these peculiar larvae "imitate" the
coloured galls frequently found on the leaves of trees. The North
American forms of this family have very varied and most
extraordinary larvae.[291] In the pretty and conspicuous larva of
Empretia stimulea, the tubercles or processes of the body are, in the
later stages, armed with hairs, that contain a poisonous or irritating
fluid, said to be secreted by glands at the bases of the processes.
These hairs are readily detached and enter the skin of persons
handling the caterpillars. The larva of the North American Hag-moth,
Phobetron pithecium, is a curious object, bearing long, fleshy
appendages covered with down. Hubbard makes the following
statement as to the instincts of this larva:[292]—"The hag-moth larvae
do not seek to hide away their cocoons, but attach them to leaves
and twigs fully exposed to view, with, however, such artful
management as to surroundings and harmonising colours that they
are of all the group the most difficult to discover. A device to which
this Insect frequently resorts exhibits the extreme of instinctive
sagacity. If the caterpillar cannot find at hand a suitable place in
which to weave its cocoon, it frequently makes for itself more
satisfactory surroundings by killing the leaves, upon which, after they
have become dry and brown in colour, it places its cocoon. Several
of these caterpillars unite together, and selecting a long and vigorous
immature shoot or leader of the orange tree, they kill it by cutting into
its base until it wilts and bends over. The leaves of a young shoot in
drying turn a light tan-color, which harmonises most perfectly with
the hairy locks of the caterpillar covering the cocoon. The latter is,
consequently, not easily detected, even when placed upon the
exposed and upturned surface of the leaf."
The cocoons of Limacodidae are unusually elaborate, the larva

forming a perfect lid in order to permit itself to escape when a moth.
Chapman states that the larva lies unchanged in the cocoon all
winter, moulting to a pupa in the spring, and that the pupa escapes
from the cocoon previous to the emergence of the moth.[293] Both
Chapman and Packard look on the family as really nearer to
Microlepidoptera than to Bombyces; Meyrick (calling it
Heterogeneidae) places it at the end of his series Psychina next
Zygaenidae.
We may allude here to the little moths, described by Westwood

under the name of Epipyrops,[294] that have the extraordinary habit
of living on the bodies of live Homopterous Insects of the family
Fulgoridae in India. What their nutriment may be is not known. The
larva exudes a white flocculent matter, which becomes a
considerable mass, in the midst of which the caterpillar changes to a
pupa. Westwood placed the Insect in Arctiidae; Sir George Hampson
suggests it may be a Limacodid, and this appears probable.
Fam. 27. Megalopygidae (or Lagoidae).—The American genera,
Megalopyge and Lagoa, are treated by Berg and by Packard[295] as
a distinct family intermediate between Saturniidae and Limacodidae.
The larva is said by the latter authority to have seven pairs of
abdominal feet instead of five pairs—the usual number in
Lepidoptera. When young the caterpillars of Lagoa opercularis are
white and resemble a flock of cotton wool. When full grown the larva
presents the singular appearance of a lock of hair, moving in a
gliding, slug-like manner. Under the long silky hair there are short,
stiff, poison-hairs. The larva forms a cocoon, fitted with a hinged
trap-door for the escape of the future moth. This curious larva is
destroyed by both Dipterous and Hymenopterous parasites.
Fam. 28. Thyrididae.—A small family of Pyraloid moths, exhibiting

considerable variety of form and colour, frequently with hyaline
patches on the wings. They are mostly small Insects, and contain no
very striking forms. Some of them look like Geometrids of various
groups. The family is widely distributed in the tropical zone, and
includes 25 genera, of which Rhodoneura, with upwards of 100
species, is the chief one. The larvae are said to be similar to those of
Pyralidae. This family is considered by Hampson and Meyrick to be
ancestral to butterflies.[296]
Fig. 201.—Lappet-moth, Gastropacha quercifolia, ♀. Britain.
Fam. 29. Lasiocampidae (Eggers, Lappet-moths). Usually large

Insects densely covered with scales, without frenulum, but with the
costal area of the hind wing largely developed, and the male
antennae beautifully pectinate, Lasiocampids are easily recognised.
They are well known in Britain, though we have but few species. The
flight of some of the species is powerful, but ill-directed, and the
males especially, dash about as if their flight were quite undirected;
as indeed it probably is. The difference in the flight of the two sexes
is great in some species. In the genus Suana and its allies we meet
with moths in which the difference in size of the two sexes is
extreme; the males may be but 1½ inches across the wings, while
the very heavy females may have three times as great an expanse.
Kirby separates these Insects to form the family Pinaridae; it
includes the Madagascar silkworm, Borocera madagascariensis. The
African genus Hilbrides is remarkable for the wings being destitute of
scales, and consequently transparent, and for being of very slender
form like a butterfly. The eggs of Lasiocampidae are smooth, in
certain cases spotted in an irregular manner like birds' eggs.
Sometimes the parent covers them with hair. The larvae are clothed
with a soft, woolly hair, as well as with a shorter and stiffer kind,
neither beautifully arranged nor highly coloured, and thus differing
from the caterpillars of Lymantriidae; this hair in some cases has
very irritating properties. Cocoons of a close and compact nature are
formed, and hairs from the body are frequently mixed with the
cocoon. In some species the walls of the cocoons have a firm
appearance, looking very like egg-shell—a fact which is supposed to
have given rise to the name of Eggers. Professors Poulton and
Meldola have informed us that this appearance is produced by
spreading calcium oxalate on a slight framework of silk, the
substance in question being a product of the Malpighian tubes.[297]
In various families of Lepidoptera it happens that occasionally the
pupa exists longer than usual before the appearance of the perfect
Insect, and in certain members of this family—notoriously in
Poecilocampa populi, the December moth—this interval may be
prolonged for several years. There is not at present any explanation
of this fact. It may be of interest to mention the following case:—
From a batch of about 100 eggs deposited by one moth, in the year
1891 (the Puss-Moth of the family Notodontidae), some sixty or
seventy cocoons were obtained, the feeding up of all the larvae
having been effected within fourteen days of one another; fourteen of
the Insects emerged as moths in 1892; about the same number in
1893; in 1894, twenty-five; and in 1895, eleven emerged.
Lasiocampidae is a large family, consisting of some 100 genera and
500 or more species, and is widely distributed. It is unfortunately
styled Bombycidae by some naturalists.
Fam. 30. Endromidae.—The "Kentish glory," Endromis versicolor,

forms this family; it is a large and strong moth, and flies wildly in the
daytime in birch-woods. The larva has but few hairs, and is said
when young to assume a peculiar position, similar to that of saw-fly
larvae, by bending the head and thorax backwards over the rest of
the body.
Fam. 31. Pterothysanidae.—Consists of the curious East Indian

genus Pterothysanus, in which the inner margins of the hind wings
are fringed with long hairs. They are moths of slender build, with
large wing-expanse, black and white in colour, like Geometrids.
There is no frenulum. Metamorphoses unknown.
Fam. 32. Lymantriidae.—(Better known as Liparidae). These are

mostly small or moderate-sized moths, without brilliant colours;
white, black, grey and brown being predominant; with highly-
developed, pectinated antennae in the male. The larva is very hairy,
and usually bears tufts or brushes of shorter hairs, together with
others much longer and softer, these being sometimes also
amalgamated to form pencils; the coloration of these larvae is in
many cases very conspicuous, the tufts and pencils being of vivid
and strongly contrasted colours. Some of these hairy larvae are
poisonous. A cocoon, in which much hair is mixed, is formed. The
pupae are remarkable, inasmuch as they too are frequently hairy, a
very unusual condition in Lepidoptera. The Lymantriidae is one of
the largest families of the old group Bombyces; it includes some 180
genera and 800 species, and is largely represented in Australia.
Dasychira rossii is found in the Arctic regions. In Britain we have
eight genera represented by eleven species; the Gold-tails, Brown-
tails and Vapourer-moths being our commonest Bombyces, and the
latter being specially fond of the London squares and gardens,
where its beautiful larva may be observed on the leaves of roses.
Most of the Lymantriidae are nocturnal, but the male Vapourer-moth
flies in the daytime. In this family there are various species whose
females have the wings small and unfit for flight, the Insects being
very sluggish, and their bodies very heavy. This is the state of the
female of the Vapourer-moth. The males in these cases are
generally remarkably active, and very rapid on the wing.
Some of these moths increase in numbers to an enormous extent,

and commit great ravages. Psilura monacha—the Nun, "die Nonne"
of the Germans,[298]—is one of the principal troubles of the
conservators of forests in Germany, and great sums of money are
expended in combating it; all sorts of means for repressing it,
including its infection by fungi, have been tried in vain. The
caterpillars are, however, very subject to a fungoid disease,
communicated by natural means. It is believed, too, that its
continuance in any locality is checked after a time by a change in the
ratio of the two sexes. It is not a prolific moth, for it lays only about
100 eggs, but it has been shown that after making allowance for the
numerous individuals destroyed by various enemies, the produce of
one moth amounts in five generations to between four and five
million individuals. The larva feeds on Coniferae, and on many leafy
trees and shrubs. The young larva is provided with two sets of setae,
one set consisting of very long hairs, the other of setae radiating
from warts; each one of this second set of spines has a small
bladder in the middle, and it has been suggested that these assist in
the dissemination of the young caterpillars by atmospheric means.
[299] These aerostatic setae exist only in the young larva. The
markings of the moth are very variable; melanism is very common
both in the larva and imago; it has been shown conclusively that
these variations are not connected, as black larvae do not give a
larger proportion of black moths than light-coloured caterpillars do. In
England this moth is never injurious. A closely allied form, Ocneria
dispar, was introduced by an accident into North America from
Europe about thirty years ago; for twenty years after its introduction it
did no harm, and attracted but little attention; it has, however, now
increased so much in certain districts that large sums of money have
been expended in attempting its extirpation.
Dasychira pudibunda has occasionally increased locally to an
enormous extent, but in the limited forests of Alsace the evil was
cured by the fact that the caterpillars, having eaten up all the foliage,
then died of starvation.[300] Teara melanosticta is said to produce
columns of processionary caterpillars in Australia.
Fam. 33. Hypsidae (or Aganaidae).—A family of comparatively

small extent, confined to the tropical and sub-tropical regions of the
Eastern hemisphere. The colours are frequently buff and grey, with
white streaks on the outer parts of the wings. We have nothing very
like them in the European fauna, our species of Spilosoma are
perhaps the nearest approach. In Euplocia the male has a pouch
that can be unfolded in front of the costa at the base of the anterior
wing; it is filled with very long, peculiar, hair-like scales growing from
the costal margin; both sexes have on each side of the second
abdominal segment a small, projecting structure that may be a
sense-organ. The female is more gaily coloured than the male.
Fam. 34. Arctiidae.—With the addition recently made to it of the

formerly separate family Lithosiidae, Arctiidae has become the most
extensive family of the old Bombycid series of moths, comprising
something like 500 genera and 3000 species. Hampson recognises
four sub-families—Arctiinae, Lithosiinae, Nolinae, Nycteolinae,—to
which may be added others from America—Pericopinae, Dioptinae,
Ctenuchinae; these sub-families being treated as families by various
authors. The sub-family Arctiinae includes our Tiger- and Ermine-
moths, and a great many exotic forms of very diverse colours and
patterns; the species of this division are, on the whole, probably
more variable in colour and markings than in any other group of
Lepidoptera. There are many cases of great difference of the sexes;
in the South American genus Ambryllis the male is remarkable for its
hyaline wings with a few spots; while the female is densely scaled,
and very variegate in colour. There are some cases (the South
European genus Ocnogyna) where the female is wingless and
moves but little, while the male flies with great rapidity. Epicausis
smithi, from Madagascar, one of the most remarkable of moths, is
placed in this division of Arctiidae; it is of a tawny colour, variegate
with black; the abdomen of this latter colour is terminated by a large
tuft of long scarlet hairs; the Insect has somewhat the appearance of
a Hummingbird-hawkmoth. Ecpantheria is an extensive genus of
tropical American moths (having one or two species in North
America), of black and white or grey colours, with very complex
markings; the male in some species has a part of the hind wing
produced as a tail, or lobe, of a different colour.
The sub-family Pericopinae are almost peculiar to South America

(two species of Gnophaela exist in North America); some of this sub-
family bear a great resemblance to Heliconiid butterflies.
The Dioptinae are likewise American moths of diurnal habits, and

many of them bear a striking resemblance to the Ithomiid butterflies
they associate with when alive.
The sub-family Lithosiinae is of great extent; our native "Footmen"

give a very good idea of it; the moths are generally of light structure,
with long, narrow front wings; a simple system of yellow and black
colour is of frequent occurrence. Many of this group feed in the larval
state on lichens. Hampson includes in this group the Nyctemeridae
—light-bodied diurnal moths, almost exclusively of black and white
colours, of Geometrid form, frequently treated as a distinct family.
The sub-family Nolinae is a small group of rather insignificant

Insects, in appearance like Pyralids or Geometrids; four or five
species are native in Britain. Packard maintains the family Nolidae
as distinct.[301]
The sub-family Nycteolinae consists of a few small moths the

position of which has always been uncertain; Nycteola (better known
as Sarrothripus), Halias, and Earias are all British genera that have
been placed amongst Tortrices, to which they bear a considerable
resemblance. Sarrothripus is at present placed by Hampson in
Noctuidae, by others in Lithosiidae, by Meyrick in Arctiidae. The sub-
family forms the family Cymbidae of Kirby;[302] it includes at present
only about 70 species, all belonging to the Eastern hemisphere. Two
types of larvae are known in it: one bare, living exposed on leaves;
the other, Earias, hairy, living among rolled-up leaves. Halias
prasinana is known from the testimony of numerous auditors to
produce a sound when on the wing, but the modus operandi has not
been satisfactorily ascertained. Sound-production seems to be of
more frequent occurrence in Arctiidae than it is in any other family of
Lepidoptera; Dionychopus niveus produces a sound by, it is
believed, friction of the wings. In the case of the genera Setina and
Chelonia the process is said to be peculiar to the male sex:
Laboulbène believes it to proceed from drum-like vesicles situate
one on each side of the base of the metathorax.[303]
Fam. 35. Agaristidae.—An interesting assemblage of moths, many

of them diurnal and of vivid colours, others crepuscular. There is
considerable variety of appearance in the family, although it is but a
small one, and many of its members remind one of other and widely
separated families of Lepidoptera. The style and colour of the
Japanese Eusemia villicoides are remarkably like our Arctia villica. In
some forms the antennae are somewhat thickened towards the tip
and hooked, like those of the Skipper butterflies. The family consists
at present of about 250 species, but we doubt its being a sufficiently
natural one. It is very widely distributed, with the exception that it is
quite absent from Europe and the neighbourhood of the
Mediterranean Sea. In North America it is well represented. The
larvae, so far as known, are not very remarkable; they have some
lateral tufts of hair, as well as longer hairs scattered over the body.
The male of the Indian Aegocera tripartita has been noticed to

produce a clicking sound when flying, and Sir G. Hampson has
shown[304] that there is a peculiar structure on the anterior wing; he
considers that this is rubbed against some spines on the front feet,
and that the sound is produced by the friction. Though this structure
is wanting in the acknowledged congeners of A. tripartita, yet it
occurs in a very similar form in the genus Hecatesia, already noticed
under Castniidae.
Fam. 36. Geometridae (Carpets, Pugs, etc.)—This very extensive

family consists of fragile moths, only a small number being
moderately stout forms; they have a large wing-area; the antennae
are frequently highly developed in the males, but on this point there
is much diversity. Either the frenulum or the proboscis is absent in a
few cases. The caterpillars are elongate and slender, with only one
pair of abdominal feet—placed on the ninth segment—in addition to
the anal pair, or claspers. They progress by moving these two pairs
of feet up to the thoracic legs, so that the body is thrown into a large
loop, and they are hence called Loopers or Geometers. The family is
universally distributed, and occurs even in remote islands and high
latitudes; in Britain we have about 270 species. The family was
formerly considered to be closely connected with Noctuidae, but at
present the opinion that it has more intimate relations with the
families we have previously considered is prevalent. Packard
considers it near to Lithosiidae, while Meyrick merely places the six
families, of which he treats it as composed, in his series
Notodontina. Hampson adopts Meyrick's six families as subfamilies,
but gives them different names, being in this respect more
conservative than Meyrick, whose recent revision of the European
forms resulted in drastic changes in nomenclature.[305] This
classification is based almost exclusively on wing-nervuration. The
number of larval legs and the consequent mode of walking is one of
the most constant characters of the group; the few exceptions that
have been detected are therefore of interest. Anisopteryx aescularia
has a pair of undeveloped feet on the eighth segment, and,
according to Meyrick, its allies "sometimes show rudiments of the
other two pairs." The larva of Himera pennaria is said to have in
early life a pair of imperfect feet on the eighth segment, which
disappear as the larva approaches maturity.
Fig. 202—Larva of Amphidasis betularia, reposing on a rose-twig. × 1.
Cambridge.
The position of the abdominal feet and claspers throws the holding
power of the larva to the posterior part of the body, instead of to the
middle, as in other caterpillars. This, combined with the elongate
form, causes these larvae when reposing to assume attitudes more
or less different from those of other larvae; holding on by the
claspers, some of these Insects allow all the anterior parts of the
body to project in a twig-like manner. The front parts are not,
however, really free in such cases, but are supported by a thread of
silk extending from the mouth to some point near-by. Another plan
adopted is to prop the front part of the body against a twig placed at
right angles to the supporting leaf, so that the caterpillar is in a
diagonal line between the two (Fig. 202). Other Geometers assume
peculiar coiled or spiral attitudes during a whole or a portion of their
lives; some doing this on a supporting object—leaf or twig—while
others hang down (Ephyra pendularia). Certain of the larvae of
Geometridae vary in colour, from shades of brown to green; there is
much diversity in this variation. In some species it is simple variation;
in others it is dimorphism, i.e. the larvae are either brown or green. In
other cases the larvae are at first variable, subsequently dimorphic.
In Amphidasis betularia it would appear that when the larva is
hatched the dimorphism is potential, and that the future colour,
whether green or brown, is settled by some determining condition
during the first period of larval life and cannot be subsequently
modified.[306] According to Poulton, the dark tint is due in A.
betularia to colouring matter in the skin or immediately below it, and
the green tint to a layer of fat between the hypodermis and the
superficial muscles; this layer being always green, but more brightly
green in the larvae that are of this colour externally. Much discussion
has occurred about these larval attitudes and colours, and it seems
probable that Professor Poulton has overrated the value of
protection from birds, mammals and entomologists; the chief
destroying agents being other than these, and not liable to be thus
deceived, even if the vertebrates are. In some cases such
resemblance as undoubtedly exists is not made the best use of. The
larva shown in figure 202 bore a wonderful resemblance, when
examined, to the rose-twigs it lived on, but the effect of this as a
concealing agent was entirely destroyed by the attitude; for this,
being on different lines to those of the plant, attracted the eye at
once. This larva, and we may add numerous other larvae, could
have been perfectly concealed by adopting a different attitude, but
never did so; the position represented being constantly maintained
except while feeding.
In some species of this family the adult females are without wings, or
have them so small that they can be of no use for flight. This curious
condition occurs in various and widely-separated groups of the
Geometridae; and it would be naturally supposed to have a great
effect on the economy of the species exhibiting it, but this is not the
case. Some of the flightless females affect the highest trees and, it is
believed, ascend to their very summits to oviposit. It has been
suggested that they are carried up by the winged males, but this is
probably only an exceptional occurrence; while, as they are known to
be capable of ascending with rapidity by means of crawling and
running, it may be taken for granted that this is the usual method
with them. Some of these wingless females have been found in
numbers on gas-lamps, and are believed to have been attracted by
the light, as is the case with very many of the winged forms.[307]
Neither is the geographical distribution limited by this inferior
condition of the most important of the organs of locomotion, for
Cheimatobia brumata (the Winter-moth) one of the species with
flightless female, is a common and widely distributed Insect in
Europe and North America.
Although the classification of this family is based almost entirely on
wing-nervuration, yet there are some divisions of the Geometridae in
which this character is remarkably variable, certain individuals
frequently exhibiting considerable abnormality.[308] Amphidasis
betularia is believed to have changed its variation considerably in the
course of the last fifty years. Previous to that time a black variety of
the species was unknown, but it has now become common; and it is
believed that other species of Geometridae are in process of
exhibiting a similar phenomenon.[309]
Fam. 37. Noctuidae (Owlet-Moths, Eulen of the Germans).—This

very extensive assemblage consists of moths rarely seen in the day-
time, of generally sombre colours, with antennae destitute of
remarkable developments in the male (except in a small number of
forms); proboscis and frenulum both present; a complex sense-
organ on each side of the body at the junction of the metathorax and
abdomen. The number of species already known can scarcely be
less than 8000; owing to their large numbers and the great general
resemblance of the forms, their classification is a matter of
considerable difficulty. Although the peculiar structure at the base of
the thorax was long since pointed out, it has never received any
thorough investigation. Few other remarkable structures have yet
been discovered: the most interesting is perhaps the peculiarity in
the hind wings of the males of certain Ommatophorinae recently
pointed out by Sir G. F. Hampson[310]: in the genera Patula and
Argiva the form of the hind wings is normal in the females, but in the
male the anterior one-half of each of these wings is aborted, and the
position of the nervures changed; this condition is connected with the
development of a glandular patch or fold on the wing, and is
remarkable as profoundly affecting a structure which is otherwise so
constant that the classification of the family is largely based on it.
Fig. 203—Brephos notha. Larva, newly hatched. Britain.

The larvae are as a rule destitute of the remarkable adornments of
hairs and armatures of spines that are so common in many of the
families we have previously considered; they are fond of concealing
themselves during the day and coming out at night to feed; many of
them pass most of their time at, or beneath, the surface of the
ground, finding nourishment in roots or the lower parts of the stems
of plants; this is notably the case in the genus Agrotis, which is
perhaps the most widely distributed of all the genera of moths. Such
caterpillars are known as Cut-worms in North America.[311] The great
resemblance, inter se, of certain of these Cut-worms, much
astonished the American naturalist Harris, who found that larvae
almost perfectly similar produced very different moths. The majority
of Noctuid larvae have the usual number of legs, viz., three pairs of
thoracic legs, four pairs of abdominal feet and the terminal claspers.
In some divisions of the family there is a departure from this
arrangement, and the abdominal feet are reduced to three, or even
to two, pairs. One or two larvae are known—e.g. Euclidia mi—in
which the claspers have not the usual function, but are free terminal
appendages. When the abdominal legs are reduced in number
(Plusia, e.g.) the larvae are said to be Half-loopers, or Semi-loopers,
as they assume to some extent the peculiar mode of progression of
the Geometrid larvae, which are known as Loopers. In the case of
certain larvae, e.g. Triphaena, that have the normal number of feet, it
has been observed that when first hatched, the one or two anterior
pairs of the abdominal set are ill developed, and the larvae do not
use them for walking. This is the case with the young larva of our
British Brephos notha (Fig. 203). Subsequently, however, this larva
undergoes a considerable change, and appears in the form shown in
Fig. 204. This interesting larva joins together two or three leaves of
aspen and lives between them, an unusual habit for Noctuid larvae.
When about to pupate it bores into bark or soft wood to change to a
pupa, Fig. 205; the specimen represented closed the hole of entry by
placing two separate doors of silk across the burrow, as shown at d.
The anal armature of this pupa is terminated by a curious transverse
process. The systematic position of this interesting Insect is very
uncertain: Meyrick and others associate it with the Geometridae.
Fig. 204—Brephos notha. Adult larva.
Fig. 205 —Brephos notha. A, Pupa, ventral aspect; B, extremity of

body, magnified; C, the pupa in wood; d, diaphragms constructed
by the larva.
The larva of Leucania unipunctata is the notorious Army-worm that

commits great ravages on grass and corn in North America. This
species sometimes increases in numbers to a considerable extent
without being observed, owing to the retiring habits of the larvae;
when, however, the increase of numbers has been so great that food
becomes scarce, or for some other cause—for the scarcity of food is
supposed not to be the only reason—the larvae become gregarious,
and migrate in enormous swarms: whence its popular name. The
Cotton-worm, Aletia xylinae is even more notorious on account of its
ravages. Riley states[312] that in bad years the mischief it commits
on the cotton crop causes a loss of £6,000,000, and that for a period
of fourteen successive years the annual loss averaged about
£3,000,000. This caterpillar strips the cotton plants of all but their
branches. It is assisted in its work by another highly destructive
Noctuid caterpillar, the Boll-worm, or larva of Heliothis armigera,
which bores into the buds and pods. This latter Insect attacks a great
variety of plants, and has a very wide distribution, being found even
in England, where happily it is always a rare Insect.
In Britain, as well as in parts of Northern Europe, a Noctuid moth,

Charaeas graminis, occasionally increases to an enormous extent:

New Zealand Financial Accounting 6Th Edition Deega Test Bank Full Chapter PDF

Uploaded by

Copyright:

Available Formats

You might also like

New Zealand Financial Accounting 6Th Edition Deega Test Bank Full Chapter PDF

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

New Zealand Financial Accounting 6Th Edition Deega Test Bank Full Chapter PDF

Uploaded by

Copyright:

Available Formats

New Zealand Financial Accounting 6th

Edition Deega Test Bank

19. Identifiable intangible assets are those intangible assets that:

20. Examples of intangible assets include:

21. Examples of elements of a business that commonly make up goodwill are:

23. An intangible asset may be recorded.

25. AASB 138 states that intangible assets:

Actual $000 Budg

37. Purchased goodwill is recognised as the amount of:

What is the value of goodwill, if any?

Carrying amount Recoverable amount Fair value

What is the value of goodwill, if any?

Total assets 564,000

Total liabilities 108,000

Net assets 456,000

Carrying Amount RecoverableAmount

E. None of the given answers.

8. Goodwill is a term used for the composite asset of identifiable intangibles:

Deegan - Chapter 08 #10

Deegan - Chapter 08 #11

Deegan - Chapter 08 #12

Deegan - Chapter 08 #13

Deegan - Chapter 08 #14

Deegan - Chapter 08 #15

Deegan - Chapter 08 #16

Deegan - Chapter 08 #17

Deegan - Chapter 08 #18

Deegan - Chapter 08 #19

20. Examples of intangible assets include:

Deegan - Chapter 08 #20

Deegan - Chapter 08 #21

22. Because intangible assets have no physical form:

Deegan - Chapter 08 #22

Deegan - Chapter 08 #23

Deegan - Chapter 08 #24

Deegan - Chapter 08 #25

26. AASB 138 defines development as:

Deegan - Chapter 08 #26

Deegan - Chapter 08 #27

Deegan - Chapter 08 #28

Deegan - Chapter 08 #29

Deegan - Chapter 08 #30

Deegan - Chapter 08 #31

Deegan - Chapter 08 #32

Deegan - Chapter 08 #33

Actual $000 Budg

Deegan - Chapter 08 #34

Deegan - Chapter 08 #35

Deegan - Chapter 08 #36

Deegan - Chapter 08 #37

What is the value of goodwill, if any?

Deegan - Chapter 08 #38

Carrying amount Recoverable amount Fair value

What is the value of goodwill, if any?

Deegan - Chapter 08 #39

Deegan - Chapter 08 #40

Deegan - Chapter 08 #41