Question 1

Under current accounting practice, intangible assets are classified as

Accepted Answer

A)  amortizable or unamortizable. 
B)  limited-life or indefinite-life. 
C)  specifically identifiable or goodwill-type. 
D)  legally restricted or goodwill-type. 
A)  amortizable or unamortizable. 
B)  limited-life or indefinite-life. 
C)  specifically identifiable or goodwill-type. 
D)  legally restricted or goodwill-type. B

Question 2

Which of the following costs should be excluded from research and development expense?

Accepted Answer

A)  Modification of the design of a product 
B)  Acquisition of R & D equipment for use on a current project only 
C)  Cost of marketing research for a new product 
D)  Engineering activity required to advance the design of a product to the manufacturing stage 
A)  Modification of the design of a product 
B)  Acquisition of R & D equipment for use on a current project only 
C)  Cost of marketing research for a new product 
D)  Engineering activity required to advance the design of a product to the manufacturing stage C

Question 3

When a new company is acquired, which of these intangible assets, unrecorded on the acquired company's books, might be recorded in addition to goodwill?

Accepted Answer

A)  A trade name. 
B)  A patent. 
C)  A customer list. 
D)  All of the above. 
A)  A trade name. 
B)  A patent. 
C)  A customer list. 
D)  All of the above. D

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

How should research and development costs be accounted for, according to an IASB Statement?

Accepted Answer

A)  Must be capitalized when incurred and then amortized over their estimated useful lives. 
B)  Must be expensed in the period incurred. 
C)  May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved. 
D)  Must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable. 
A)  Must be capitalized when incurred and then amortized over their estimated useful lives. 
B)  Must be expensed in the period incurred. 
C)  May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved. 
D)  Must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable.

Question 6

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 7

After an impairment loss is recorded for a limited-life intangible asset, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods.

Accepted Answer

A) True 
 B)False

Question 8

Research and development costs

Accepted Answer

A)  are intangible assets. 
B)  may result in the development of a patent. 
C)  are easily identified with specific projects. 
D)  all of the above. 
A)  are intangible assets. 
B)  may result in the development of a patent. 
C)  are easily identified with specific projects. 
D)  all of the above.

Question 9

All of the following are true regarding recovery of impairments for intangible assets except

Accepted Answer

A)  After a recovery of impairment has been recognized, the carrying value of the asset reported on the statement of financial position will be the higher of the fair value less cost to sell or the value-in-use. 
B)  No recovery of impairment is allowed for Goodwill. 
C)  A recovery of impairment will be reported in the "Other income and expense" section of the income statement. 
D)  The amount of the recovery is limited to the carrying value of the asset that would have been reported had no impairment occurred. 
A)  After a recovery of impairment has been recognized, the carrying value of the asset reported on the statement of financial position will be the higher of the fair value less cost to sell or the value-in-use. 
B)  No recovery of impairment is allowed for Goodwill. 
C)  A recovery of impairment will be reported in the "Other income and expense" section of the income statement. 
D)  The amount of the recovery is limited to the carrying value of the asset that would have been reported had no impairment occurred.

Question 10

Accounting for impairments for limited-life intangible assets follows the same rules used to account for impairments of plant and equipment.

Accepted Answer

A) True 
 B)False

Question 11

Factors considered in determining an intangible asset's useful life include all of the following except

Accepted Answer

A)  the expected use of the asset. 
B)  any legal or contractual provisions that may limit the useful life. 
C)  any provisions for renewal or extension of the asset's legal life. 
D)  the amortization method used. 
A)  the expected use of the asset. 
B)  any legal or contractual provisions that may limit the useful life. 
C)  any provisions for renewal or extension of the asset's legal life. 
D)  the amortization method used.

Question 12

Which of the following intangible assets could not be sold by a business to raise needed cash for a capital project?

Accepted Answer

A)  Patent. 
B)  Copyright. 
C)  Goodwill. 
D)  Trade name. 
A)  Patent. 
B)  Copyright. 
C)  Goodwill. 
D)  Trade name.

Question 13

Operating losses incurred during the start-up years of a new business should be

Accepted Answer

A)  accounted for and reported like the operating losses of any other business. 
B)  written off directly against retained earnings. 
C)  capitalized as a deferred charge and amortized over five years. 
D)  capitalized as an intangible asset and amortized over a period not to exceed 20 years. 
A)  accounted for and reported like the operating losses of any other business. 
B)  written off directly against retained earnings. 
C)  capitalized as a deferred charge and amortized over five years. 
D)  capitalized as an intangible asset and amortized over a period not to exceed 20 years.

Question 14

Which of the following costs should be capitalized in the year incurred?

Accepted Answer

A)  Research and development costs. 
B)  Costs to internally generate goodwill. 
C)  Organizational costs. 
D)  Costs to successfully defend a patent. 
A)  Research and development costs. 
B)  Costs to internally generate goodwill. 
C)  Organizational costs. 
D)  Costs to successfully defend a patent.

Question 15

Periodic alterations to existing products are an example of research and development costs.

Accepted Answer

A) True 
 B)False

Question 16

Research phase costs are capitalized as an intangible asset once the project has economic viability.

Accepted Answer

A) True 
 B)False

Question 17

Research and development costs that result in patents may be capitalized to the extent of the fair value of the patent.

Accepted Answer

A) True 
 B)False

Question 18

Goodwill is considered a master valuation account because it measures the value of specifically identifiable intangible assets.

Accepted Answer

A) True 
 B)False

Question 19

A recovery of impairment for an intangible long-lived asset is limited to the carrying value that would have been reported had the impairment not occurred.

Accepted Answer

A) True 
 B)False

Question 20

The major problem of accounting for intangibles is determining

Accepted Answer

A)  fair value. 
B)  separability. 
C)  salvage value. 
D)  useful life. 
A)  fair value. 
B)  separability. 
C)  salvage value. 
D)  useful life.

Under current accounting practice, intangible assets are classified as

Which of the following costs should be excluded from research and development expense?

When a new company is acquired, which of these intangible assets, unrecorded on the acquired company's books, might be recorded in addition to goodwill?

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

How should research and development costs be accounted for, according to an IASB Statement?

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

After an impairment loss is recorded for a limited-life intangible asset, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods.

Research and development costs

All of the following are true regarding recovery of impairments for intangible assets except

Accounting for impairments for limited-life intangible assets follows the same rules used to account for impairments of plant and equipment.

Factors considered in determining an intangible asset's useful life include all of the following except

Which of the following intangible assets could not be sold by a business to raise needed cash for a capital project?

Operating losses incurred during the start-up years of a new business should be

Which of the following costs should be capitalized in the year incurred?

Periodic alterations to existing products are an example of research and development costs.

Research phase costs are capitalized as an intangible asset once the project has economic viability.

Research and development costs that result in patents may be capitalized to the extent of the fair value of the patent.

Goodwill is considered a master valuation account because it measures the value of specifically identifiable intangible assets.

A recovery of impairment for an intangible long-lived asset is limited to the carrying value that would have been reported had the impairment not occurred.

The major problem of accounting for intangibles is determining

Financial Reporting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Statement of Financial Position 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

Filters

Exam 12: Intangible Assets

Under current accounting practice, intangible assets are classified as

Which of the following costs should be excluded from research and development expense?

When a new company is acquired, which of these intangible assets, unrecorded on the acquired company's books, might be recorded in addition to goodwill?

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

How should research and development costs be accounted for, according to an IASB Statement?

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

After an impairment loss is recorded for a limited-life intangible asset, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods.

Research and development costs

All of the following are true regarding recovery of impairments for intangible assets except

Accounting for impairments for limited-life intangible assets follows the same rules used to account for impairments of plant and equipment.

Factors considered in determining an intangible asset's useful life include all of the following except

Which of the following intangible assets could not be sold by a business to raise needed cash for a capital project?

Operating losses incurred during the start-up years of a new business should be

Which of the following costs should be capitalized in the year incurred?

Periodic alterations to existing products are an example of research and development costs.

Research phase costs are capitalized as an intangible asset once the project has economic viability.

Research and development costs that result in patents may be capitalized to the extent of the fair value of the patent.

Goodwill is considered a master valuation account because it measures the value of specifically identifiable intangible assets.

A recovery of impairment for an intangible long-lived asset is limited to the carrying value that would have been reported had the impairment not occurred.

The major problem of accounting for intangibles is determining

Financial Reporting and Accounting Standards

Conceptual Framework for Financial Reporting

The Accounting Information System

Income Statement and Related Information

Statement of Financial Position 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

Filters