Exam 12: Intangible Assets

Fred's Company is considering the write-off of a limited life intangible asset because of its lack of profitability. Explain to the management of Fred's how to determine whether a writeoff is permitted.

Which of the following research and development related costs should be capitalized and depreciated over current and future periods?

Which of the following is often reported as an extraordinary item?

Platteville Corporation has the following account balances at 12/31/15: What amount should Platteville report for intangible assets on the 12/31/12 balance sheet?

Floyd Company purchases Haeger Company for $1,600,000 cash on January 1, 2015. The book value of Haeger Company's net assets, as reflected on its December 31, 2014 balance sheet is $1,240,000. An analysis by Floyd on December 31, 2012 indicates that the fair value of Haeger's tangible assets exceeded the book value by $120,000, and the fair value of identifiable intangible assets exceeded book value by $90,000. How much goodwill should be recognized by Floyd Company when recording the purchase of Haeger Company?

A loss on impairment of an intangible asset is the difference between the asset's

Vasquez Manufacturing Company decided to expand further by purchasing Wasserman Company. The balance sheet of Wasserman Company as of December 31, 2015 was as follows: An appraisal, agreed to by the parties, indicated that the fair value of the inventory was $370,000 and that the fair value of the plant assets was $1,325,000. The fair value of the receivables is equal to the amount reported on the balance sheet. The agreed purchase price was $2,275,000, and this amount was paid in cash to the previous owners of Wasserman Company. Instructions Determine the amount of goodwill (if any) implied in the purchase price of $2,275,000. Show calculations.

If market value of an impaired asset recovers after an impairment has been recognized, the impairment may be reversed in a subsequent period.

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

Costs incurred internally to create intangibles are

January 2, 2012, Koll, Inc. purchased a patent for a new consumer product for $600,000. At the time of purchase, the patent was valid for 15 years; however, the patent's useful life was estimated to be only 10 years due to the competitive nature of the product. On December 31, 2015, the product was permanently withdrawn from the market under governmental order because of a potential health hazard in the product. What amount should Koll charge against income during 2015, assuming amortization is recorded at the end of each year?

Hall Co. incurred research and development costs in 2015 as follows: The amount of research and development costs charged to Hall's 2015 income statement should be

Rich Corporation purchased a limited-life intangible asset for $300,000 on May 1, 2013. 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, 2015?

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

General Products Company bought Special Products Division in 2014 and appropriately recorded $750,000 of goodwill related to the purchase. On December 31, 2015, the fair value of Special Products Division is $6,000,000 and it is carried on General Product's books for a total of $5,100,000, including the goodwill. An analysis of Special Products Division's assets indicates that goodwill of $600,000 exists on December 31, 2015. What goodwill impairment should be recognized by General Products in 2015?

12-129On September 1, 2015, Vernon Corporation acquired Barlow Enterprises for a cash payment of $850,000. At the time of purchases, Barlow's balance sheet showed assets of $620,000, liabilities of $240,000, and owner's equity of $420,000. The fair value of Barlow's assets is estimated to be $970,000. Compute the amount of goodwill acquired by Vernon.

Which of the following intangible assets should not be amortized?

During 2015, Leon Co. incurred the following costs: In Leon's 2015 income statement, research and development expense should be

Goodwill may be recorded when

Contra accounts must be reported for intangible assets in a manner similar to accumulated depreciation and property, plant, and equipment.