Question 1

Which of the following is not a characteristic of intangible assets? Intangible assets must be

Accepted Answer

A) Individually identifiable 
B) Non-monetary in nature 
C) Non-physical in nature 
D) Identifiable as part of the business as a whole 
A) Individually identifiable 
B) Non-monetary in nature 
C) Non-physical in nature 
D) Identifiable as part of the business as a whole

Question 2

The proper accounting for the costs incurred in creating computer software products that are to be sold, leased, or otherwise marketed to external parties, is to

Accepted Answer

A) capitalize all costs until the software is sold to external parties. 
B) charge research and development expense when incurred until technological feasibility has been established for the product. 
C) charge research and development expense only if the computer software has alternative future uses. 
D) capitalize all costs as incurred until a detailed program design or working model is 
A) capitalize all costs until the software is sold to external parties. 
B) charge research and development expense when incurred until technological feasibility has been established for the product. 
C) charge research and development expense only if the computer software has alternative future uses. 
D) capitalize all costs as incurred until a detailed program design or working model is

Question 3

If a trademark is developed by the enterprise itself, the costs should be

Accepted Answer

A) capitalized if future benefits are reasonably assured. 
B) capitalized. 
C) expensed. 
D) expensed if future benefits are reasonably assured. 
A) capitalized if future benefits are reasonably assured. 
B) capitalized. 
C) expensed. 
D) expensed if future benefits are reasonably assured.

Question 4

Under IFRS, to determine if there is an impairment loss:

Accepted Answer

A) Compare the fair value of the identifiable assets to the book value of the assets 
B) Compare the fair value of the reporting unit against the carrying value of the reporting unit 
C) Compare the imputed current fair value of goodwill with the carrying value of goodwill 
D) Compare the carrying amount of the CGU with the recoverable amount 
A) Compare the fair value of the identifiable assets to the book value of the assets 
B) Compare the fair value of the reporting unit against the carrying value of the reporting unit 
C) Compare the imputed current fair value of goodwill with the carrying value of goodwill 
D) Compare the carrying amount of the CGU with the recoverable amount

Question 5

Which of the following costs of goodwill should be capitalized?

Accepted Answer

The answer of Which of the following costs of goodwill...

Question 6

Which of the following statements best describes the accounting treatment for pre- opening costs for new businesses?

Accepted Answer

A) They should always be capitalized. 
B) They should always be expensed. 
C) Certain cost, such as mail order catalogues, may be capitalized under Private Entity 
D) Certain cost, such as mail order catalogues, may be capitalized under IFRS. 
A) They should always be capitalized. 
B) They should always be expensed. 
C) Certain cost, such as mail order catalogues, may be capitalized under Private Entity 
D) Certain cost, such as mail order catalogues, may be capitalized under IFRS.

Question 7

Decker Inc.incurred the following costs during the year ended December 31, 2010:   The total amount to be classified as development costs in 2010 is

Accepted Answer

A) $72,500. 
B) $120,000. 
C) $300,000 
D) $163,500 
A) $72,500. 
B) $120,000. 
C) $300,000 
D) $163,500

Question 8

On January 2, 2007, Mortensen, Ltd.purchased a patent for a new consumer product for $90,000.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, 2010, the product was permanently withdrawn from sale under
Governmental order because of a potential health hazard in the product.What amount should Mortensen charge against income during 2010, assuming amortization is recorded
At the end of each year?

Accepted Answer

A) $72,000. 
B) $63,000. 
C) $54,000. 
D) $9,000. 
A) $72,000. 
B) $63,000. 
C) $54,000. 
D) $9,000.

Question 9

Which of the following intangible assets should not be amortized?

Accepted Answer

A) Copyrights 
B) Organization costs with limited life 
C) Goodwill 
D) All of these intangible assets should be amortized. 
A) Copyrights 
B) Organization costs with limited life 
C) Goodwill 
D) All of these intangible assets should be amortized.

Question 10

Use the following information for questions 
Jeremiah Inc.is being targeted for acquisition by Argo Corporation.As an analyst for
Argo, you are asked to determine the goodwill that, pending various assumptions, may be inherent in this potential transaction.
The available information relating to Jeremiah includes the following: Current net assets: $5.1 million.
Expected return on net asset for industry: 10%
Reported net income for the previous six consecutive years:
   
The earnings for 2007 included a $200,000 gain from the sale of a discontinued part of its business.
-Assuming that excess earnings are expected to continue for 8 years, and ignoring the time value of money, estimated goodwill is

Accepted Answer

A) $2,273,000 
B) $2,006,667 
C) $1,854,333 
D) $1,531,733 
A) $2,273,000 
B) $2,006,667 
C) $1,854,333 
D) $1,531,733

Question 11

If the fair value of the net asset acquired is greater than the purchase price the amount is:

Accepted Answer

A) negative goodwill 
B) contributed surplus 
C) purchased goodwill 
D) organizational costs 
A) negative goodwill 
B) contributed surplus 
C) purchased goodwill 
D) organizational costs

Question 12

Which of the following is an appropriate method to determine when the development stage is over for an enterprise in the development stage?

Accepted Answer

A) b, c, and d 
B) When significant revenue has been earned. 
C) After a specific date. 
D) When a specific level of sales has been reached. 
A) b, c, and d 
B) When significant revenue has been earned. 
C) After a specific date. 
D) When a specific level of sales has been reached.

Question 13

Which of the following is not a method of calculating goodwill?

Accepted Answer

A) Capitalize excess earnings 
B) Discount the excess earnings for a limited number of years 
C) Capitalize total average earnings and subtract the fair value of net assets 
D) All of these are methods of calculating goodwill. 
A) Capitalize excess earnings 
B) Discount the excess earnings for a limited number of years 
C) Capitalize total average earnings and subtract the fair value of net assets 
D) All of these are methods of calculating goodwill.

Question 14

Which of the following statements best describes when goodwill should be tested for impairment under IFRS?

Accepted Answer

A) Goodwill should be tested for impairment when events or changes in circumstance indicate that impairment may have occurred. 
B) Goodwill should be tested annually for impairment regardless of the circumstances. 
C) Goodwill should be tested for impairment annually and whenever events or changes in circumstance indicate that impairment may have occurred. 
D) Goodwill should only be tested for impairment when the company follows a policy to amortize its goodwill. 
A) Goodwill should be tested for impairment when events or changes in circumstance indicate that impairment may have occurred. 
B) Goodwill should be tested annually for impairment regardless of the circumstances. 
C) Goodwill should be tested for impairment annually and whenever events or changes in circumstance indicate that impairment may have occurred. 
D) Goodwill should only be tested for impairment when the company follows a policy to amortize its goodwill.

Question 15

Which of the following statements best describes when goodwill should be tested for impairment under Private Entity GAAP?

Accepted Answer

A) Goodwill should be tested for impairment when events or changes in circumstances indicate that impairment may have occurred. 
B) Goodwill should be tested annually for impairment regardless of the circumstances. 
C) Goodwill should be tested for impairment annually and whenever events or changes in circumstance indicate that impairment may have occurred. 
D) Goodwill should only be tested for impairment when the company follows a policy to amortize its goodwill. 
A) Goodwill should be tested for impairment when events or changes in circumstances indicate that impairment may have occurred. 
B) Goodwill should be tested annually for impairment regardless of the circumstances. 
C) Goodwill should be tested for impairment annually and whenever events or changes in circumstance indicate that impairment may have occurred. 
D) Goodwill should only be tested for impairment when the company follows a policy to amortize its goodwill.

Question 16

The owners of Dallas' Electronics Store are contemplating selling the business to new interests.The cumulative earnings for the past 5 years amounted to $900,000 including extraordinary gains of $30,000.The annual earnings based on an average rate of return on investment for this industry would have been $138,000.If excess earnings are to be capitalized at 15%, then implied goodwill should be

Accepted Answer

A) $210,000. 
B) $280,000. 
C) $240,000. 
D) $870,000. 
A) $210,000. 
B) $280,000. 
C) $240,000. 
D) $870,000.

Question 17

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.
-Parasol's average annual net income is $75,000 above the average for Parasol's industry. Assuming Jessup estimates goodwill by capitalizing excess earnings at 14%, the estimate of goodwill is

Accepted Answer

A) nil 
B) $1,050,000 
C) $535,714 
D) $954,333 
A) nil 
B) $1,050,000 
C) $535,714 
D) $954,333

Question 18

A franchise or licence with a limited life is

Accepted Answer

A) expensed. 
B) not amortized. 
C) amortized over the lesser of its legal or useful life. 
D) amortized over its legal life. 
A) expensed. 
B) not amortized. 
C) amortized over the lesser of its legal or useful life. 
D) amortized over its legal life.

Question 19

Santo Corporation was granted a patent on a product on January 1, 2010.To protect its patent, the corporation purchased on January 1, 2009 a patent on a competing product which was originally issued on January 10, 2005.Because of its unique plan, Santo Corporation does not feel the competing patent can be used in producing a product.The cost of the competing patent should be

Accepted Answer

A) amortized over a maximum period of 20 years. 
B) amortized over a maximum period of 16 years. 
C) amortized over a maximum period of 11 years. 
D) expensed in 2009. 
A) amortized over a maximum period of 20 years. 
B) amortized over a maximum period of 16 years. 
C) amortized over a maximum period of 11 years. 
D) expensed in 2009.

Question 20

Use the following information for questions 
Jeremiah Inc.is being targeted for acquisition by Argo Corporation.As an analyst for
Argo, you are asked to determine the goodwill that, pending various assumptions, may be inherent in this potential transaction.
The available information relating to Jeremiah includes the following: Current net assets: $5.1 million.
Expected return on net asset for industry: 10%
Reported net income for the previous six consecutive years:
   
The earnings for 2007 included a $200,000 gain from the sale of a discontinued part of its business.
-During 2010, Kurz Company purchased the net assets of Sims Corporation for $635,000. On the date of the transaction, Sims had no long-term investments in marketable securities and had $200,000 of liabilities.The fair value of Sims' assets, when acquired were as follows:   How should the $365,000 difference between the fair value of the net assets acquired ($1 million) and the cost ($635,000) be accounted for by Kurz?

Accepted Answer

A) The $365,000 difference should be credited to retained earnings. 
B) The noncurrent assets should be recorded at $475,000. 
C) The current assets should be recorded at $250,500 and the noncurrent assets should be recorded at $584,500. 
D) It is not possible to answer this question until the components of the assets are 
A) The $365,000 difference should be credited to retained earnings. 
B) The noncurrent assets should be recorded at $475,000. 
C) The current assets should be recorded at $250,500 and the noncurrent assets should be recorded at $584,500. 
D) It is not possible to answer this question until the components of the assets are

Which of the following is not a characteristic of intangible assets? Intangible assets must be

The proper accounting for the costs incurred in creating computer software products that are to be sold, leased, or otherwise marketed to external parties, is to

If a trademark is developed by the enterprise itself, the costs should be

Under IFRS, to determine if there is an impairment loss:

Which of the following costs of goodwill should be capitalized?

Which of the following statements best describes the accounting treatment for pre- opening costs for new businesses?

Decker Inc.incurred the following costs during the year ended December 31, 2010: The total amount to be classified as development costs in 2010 is

Which of the following intangible assets should not be amortized?

If the fair value of the net asset acquired is greater than the purchase price the amount is:

Which of the following is an appropriate method to determine when the development stage is over for an enterprise in the development stage?

Which of the following is not a method of calculating goodwill?

Which of the following statements best describes when goodwill should be tested for impairment under IFRS?

Which of the following statements best describes when goodwill should be tested for impairment under Private Entity GAAP?

A franchise or licence with a limited life is

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

The Accounting Information System

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

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Exam 12: Intangible Assets and Goodwill

Which of the following is not a characteristic of intangible assets? Intangible assets must be

The proper accounting for the costs incurred in creating computer software products that are to be sold, leased, or otherwise marketed to external parties, is to

If a trademark is developed by the enterprise itself, the costs should be

Under IFRS, to determine if there is an impairment loss:

Which of the following costs of goodwill should be capitalized?

Which of the following statements best describes the accounting treatment for pre- opening costs for new businesses?

Decker Inc.incurred the following costs during the year ended December 31, 2010: The total amount to be classified as development costs in 2010 is

Which of the following intangible assets should not be amortized?

If the fair value of the net asset acquired is greater than the purchase price the amount is:

Which of the following is an appropriate method to determine when the development stage is over for an enterprise in the development stage?

Which of the following is not a method of calculating goodwill?

Which of the following statements best describes when goodwill should be tested for impairment under IFRS?

Which of the following statements best describes when goodwill should be tested for impairment under Private Entity GAAP?

A franchise or licence with a limited life is

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

The Accounting Information System

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Property, Plant, and Equipment: Accounting Model Basics

Depreciation, Impairment, and Disposition

Filters