Question 1

Which of the following would not be considered an R & D activity?

Accepted Answer

A) Adaptation of an existing capability to a particular requirement or customer's need. 
B) Searching for applications of new research findings. 
C) Laboratory research aimed at discovery of new knowledge. 
D) Conceptual formulation and design of possible product or process alternatives. 
A) Adaptation of an existing capability to a particular requirement or customer's need. 
B) Searching for applications of new research findings. 
C) Laboratory research aimed at discovery of new knowledge. 
D) Conceptual formulation and design of possible product or process alternatives.

Question 2

The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be

Accepted Answer

A) charged off in the current period. 
B) amortized over the legal life of the purchased patent. 
C) added to factory overhead and allocated to production of the purchaser's product. 
D) amortized over the remaining estimated life of the original patent covering the product whose market would have been impaired by competition from the newly patented product. 
A) charged off in the current period. 
B) amortized over the legal life of the purchased patent. 
C) added to factory overhead and allocated to production of the purchaser's product. 
D) amortized over the remaining estimated life of the original patent covering the product whose market would have been impaired by competition from the newly patented product.

Question 3

Ely Co.bought a patent from Baden Corp.on January 1, 2007, for $300,000.An independent consultant retained by Ely estimated that the remaining useful life is 30 years.Its unamortized cost on Baden 's accounting records was $150,000; the patent had been amortized for 5 years by Baden.How much should be amortized for the year ended December 31, 2007?

Accepted Answer

A) $0. 
B) $5,000. 
C) $10,000. 
D) $20,000. 
A) $0. 
B) $5,000. 
C) $10,000. 
D) $20,000.

Question 4

Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2006 for $10,000,000.It was expected to have a 10 year life and no residual value.Malrom uses straight-line amortization for patents.On December 31, 2007, the expected future cash flows expected from the patent were expected to be $800,000 per year for the next eight years.The present value of these cash flows, discounted at Malrom's market interest rate, is $4,800,000.At what amount should the patent be carried on the December 31, 2007 balance sheet?

Accepted Answer

A) $10,000,000 
B) $8,000,000 
C) $6,400,000 
D) $4,800,000 
A) $10,000,000 
B) $8,000,000 
C) $6,400,000 
D) $4,800,000

Which of the following would not be considered an R & D activity?

The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Current Liabilities and Contingencies

Filters

Exam 12: Intangible Assets

Which of the following would not be considered an R & D activity?

The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

The Accounting Information System

Income Statement and Related Information

Balance Sheet and Statement of Cash Flows

Accounting and the Time Value of Money

Cash and Receivables

Valuation of Inventories: a Cost-Basis Approach

Inventories: Additional Valuation Issues

Acquisition and Disposition of Property, Plant, and Equipment

Depreciation, Impairments, and Depletion

Current Liabilities and Contingencies

Filters