Exam 12: Intangible Assets

If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent may be amortized over the life of the new patent.

Which of the following principles best describes the current method of accounting for research and development costs?

Which of the following costs of goodwill should be amortized over their estimated useful lives? Costs of goodwill from a business combination Costs of developing accounted for as a purchase goodwill internally a. No No b. No Yes c. Yes Yes d. Yes No

The following information is available for Barkley Company's patents: Cost \ 1,720,000 Carrying amount 860,000 Expected future net cash flows 800,000 Fair value 640,000 Barkley would record a loss on impairment of

Intangible assets derive their value from the right (claim) to receive cash in the future.

Research and development costs are recorded as an intangible asset if it is felt they will provide economic benefits in future years.

The general ledger of Vance Corporation as of December 31, 2007, includes the following accounts: Copyrights \ 20,000 Deposits with advertising agency (will be used to promote goodwill) 27,000 Discount on bonds payable 67,500 Excess of cost over fair value of identifiable net assets of Acquired subsidiary 390,000 Trademarks 90,000 In the preparation of Vance's balance sheet as of December 31, 2007, what should be reported as total intangible assets?

Jeff Corporation purchased a limited-life intangible asset for $120,000 on May 1, 2006.It has a useful life of 10 years.What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2008?

Some intangible assets are not required to be amortized every year.

ELO Corporation purchased a patent for $180,000 on September 1, 2006.It had a useful life of 10 years.On January 1, 2008, ELO spent $44,000 to successfully defend the patent in a lawsuit.ELO feels that as of that date, the remaining useful life is 5 years.What amount should be reported for patent amortization expense for 2008?

Which of the following methods of amortization is normally used for intangible assets?

Which of the following intangible assets should not be amortized?

Which of the following legal fees should be capitalized? Legal fees to Legal fees to successfully obtain a copyright defend a trademark a. No No b. No Yes c. Yes Yes d. Yes No

Costs incurred internally to create intangibles are

In 2006, Edwards Corporation incurred research and development costs as follows: Materials and equipment \ 80,000 Personnel 120,000 Indirect costs These costs relate to a product that will be marketed in 2007.It is estimated that these costs will be recouped by December 31, 2009.The equipment has no alternative future use.What is the amount of research and development costs that should be expensed in 2006?

Lynne Corporation acquired a patent on May 1, 2008.Lynne paid cash of $20,000 to the seller.Legal fees of $800 were paid related to the acquisition.What amount should be debited to the patent account?

During 2007, Leon Co.incurred the following costs: Testing in search for process alternatives 350,000 Costs of marketing research for new product 250,000 Modification of the formulation of a process 510,000 Research and development services performed by Beck Corp. for Leon 325,000 In Leon's 2007 income statement, research and development expense should be

The carrying amount of an intangible is

Goodwill

Blue Sky Company's 12/31/08 balance sheet reports assets of $5,000,000 and liabilities of $2,000,000.All of Blue Sky's assets' book values approximate their fair value, except for land, which has a fair value that is $300,000 greater than its book value.On 12/31/08, Horace Wimp Corporation paid $5,100,000 to acquire Blue Sky.What amount of goodwill should Horace Wimp record as a result of this purchase?