Exam 12: Intangible Assets and Goodwill

In 2010, Lawrence Corporation incurred development costs as follows: These costs relate to a product that it expects to market in 2011.It is estimated that these costs will be recouped by December 31, 2013.What is the amount of development costs that could be deferred in 2010, assuming that required conditions for capitalization are met?

If a company constructs a laboratory building to be used as a research and development facility, the cost of the laboratory building is matched against earnings as

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

Under private-entity GAAP, to determine if there is an impairment loss:

Use the following information for questions Jessup Corp.will acquire a controlling stake in the outstanding shares of Parasol Inc.for $9.2 million in cash. -Assuming the fair value of Parasol's net-assets is $12.5 million, and Jessup acquired a 75% share, goodwill can be calculated as

Use the following information for questions Jessup Corp.will acquire a controlling stake in the outstanding shares of Parasol Inc.for $9.2 million in cash. -Beasley Corp.incurred $160,000 of basic research and $50,000 of development costs to develop a product for which a patent was granted on January 2, 2005.Legal fees and other costs associated with registration of the patent totalled $60,000.On March 31, 2010, Beasley paid $90,000 for legal fees in a successful defence of the patent.The total amount capitalized for the patent through March 31, 2010 should be

Use the following information for questions Jessup Corp.will acquire a controlling stake in the outstanding shares of Parasol Inc.for $9.2 million in cash. -Mouse Software Company has capitalized computer software costs of $3.6 million related to its spreadsheet product.The software is expected to have a four-year economic life and generate future revenues of $25 million.Revenues generated by this software during 2010 (first year) amounted to $7.5 million.The proper amount of software costs amortized to be recognized by Mouse in 2010 should be

Negative goodwill arises when

When determining whether an internally developed intangible asset should be recognized, the process of generating the intangible is usually broken down into the following parts:

Which of the following legal fees should be capitalized?

Purchased goodwill should be

Which of the following statements best describes the accounting for intangible assets after acquisition under IFRS?

On May 5, 2010, Mulder Corp.exchanged 5,000 of its common shares for a patent owned by Drucker Co.At May 5, 2010, Mulder's common shares were quoted at $28 per share, and the patent had a carrying value of $130,000 on Drucker's books.Mulder should record the patent at

Drip Co.bought a trademark from Gregg Corp.on January 1, 2010, for $163,000.An independent consultant retained by Drip estimated that the remaining useful life is 50 years.Its unamortized cost on Gregg's accounting records was $61,000.Drip decided to write off the trademark over the maximum period allowed.How much should be amortized for the year ended December 31, 2010?

Which of the following is not an intangible asset?

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

In January, 2005, Targa Corporation purchased a patent for a new consumer product for $900,000.At the time of purchase, the patent was valid for fifteen years.Due to the competitive nature of the product, however, the patent was estimated to have a useful life Of only ten years.During 2010 the product was permanently removed from the market Under governmental order because of a potential health hazard present in the product.What amount should Targa recognize as an impairment during 2010, assuming amortization is recorded at the end of each year?

A change in the amortization rate for an intangible asset should be accounted for as a

Huber Co.incurred research and development costs in 2010 as follows: The amount of research and development costs charged to Huber's 2010 income statement or deferred as development costs should be

Goodwill was purchased when a business was acquired.When an impairment to the goodwill is determined, the credit is usually made to