Question 1

Which of the following statements best describes when previously recognized goodwill impairment may be reversed?

Accepted Answer

A) Reversals are permitted under both Private Entity GAAP and IFRS. 
B) Reversals are permitted under Private Entity GAAP but are not allowed under IFRS 
C) Reversals are not permitted under either standard. 
D) None of these 
A) Reversals are permitted under both Private Entity GAAP and IFRS. 
B) Reversals are permitted under Private Entity GAAP but are not allowed under IFRS 
C) Reversals are not permitted under either standard. 
D) None of these

Question 2

The general ledger of Babcock Corporation as of December 31, 2010, includes the following accounts:   In the preparation of Babcock's balance sheet as of December 31, 2010, what should be reported as total intangible assets, excluding goodwill?

Accepted Answer

A) $76,000. 
B) $365,000. 
C) $381,000. 
D) $401,350. 
A) $76,000. 
B) $365,000. 
C) $381,000. 
D) $401,350.

Question 3

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 average excess earnings are discounted at 11%, estimated goodwill is (use interest table)

Accepted Answer

A) $1,784,331 
B) $1,661,432 
C) $1,462,356 
D) $1,290,818 
A) $1,784,331 
B) $1,661,432 
C) $1,462,356 
D) $1,290,818

Question 4

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.
-Monarch Football Company had a player contract with Sidka that was recorded in its accounting records at $2.9 million.Markos Football Company had a player contract with Leber that was recorded in its accounting records at $2.8 million.Monarch traded Sidka to Markos for Leber by exchanging each player's contract.The fair value of each contract was $3 million.What amount should be shown in the accounting records after the exchange of player contracts?

Accepted Answer

The answer of Use the following information for questions 
Jeremiah...

Question 5

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 $10.2 million, and Jessup acquired a 75% share, goodwill can be calculated as

Accepted Answer

A) $1,243,000 
B) $1,000,000 
C) $1,550,000 
D) $750,000 
A) $1,243,000 
B) $1,000,000 
C) $1,550,000 
D) $750,000

Question 6

Wriglee, Ltd.went to court this year and successfully defended the brand name of its product, "Sweet Gum," from infringement by a competitor.The cost of this defence should be charged to

Accepted Answer

A) patents and amortized over the legal life of the patent. 
B) legal fees and amortized over five years or less. 
C) expenses of the period. 
D) trademarks and amortized over the same period of time as the "Sweet Gum" 
A) patents and amortized over the legal life of the patent. 
B) legal fees and amortized over five years or less. 
C) expenses of the period. 
D) trademarks and amortized over the same period of time as the "Sweet Gum"

Question 7

Which of the following methods of amortization is normally used for intangible assets?

Accepted Answer

A) Capital cost allowance 
B) Straight-line 
C) Activity method 
D) Double declining-balance 
A) Capital cost allowance 
B) Straight-line 
C) Activity method 
D) Double declining-balance

Question 8

On January 1, 2006, Robson Company purchased a trademark for $400,000, having an estimated useful life of 16 years.In January 2010, Robson paid $60,000 for legal fees in a successful defence of the trademark.Trademark amortization expense for the year ended December 31, 2010, should be

Accepted Answer

A) $30,000. 
B) $28,750. 
C) $25,000. 
D) $0. 
A) $30,000. 
B) $28,750. 
C) $25,000. 
D) $0.

Question 9

Which of the following statements best describes the accounting for intangible assets after acquisition under Private Entity GAAP?

Accepted Answer

A) They may be accounted for under the cost model or the revaluation model. 
B) They should be accounted for under the cost model. 
C) They should be accounted for under the revaluation model. 
D) None of these. 
A) They may be accounted for under the cost model or the revaluation model. 
B) They should be accounted for under the cost model. 
C) They should be accounted for under the revaluation model. 
D) None of these.

Question 10

On June 30, 2010, Rock, Ltd.exchanged 3,000 of Shale Corp.no par value common shares for a patent owned by Iller Co.The Shale shares were acquired in 2008 at a cost of $80,000.At the exchange date, Shale common shares have a fair value of $45 per share, and the patent had a net carrying value of $160,000 on Iller's books.Rock should record the patent at

Accepted Answer

A) $160,000. 
B) $135,000. 
C) $90,000. 
D) $80,000. 
A) $160,000. 
B) $135,000. 
C) $90,000. 
D) $80,000.

Question 11

The intangible asset goodwill may be

Accepted Answer

A) capitalized only when purchased. 
B) capitalized either when purchased or created internally. 
C) capitalized only when created internally. 
D) written off directly to retained earnings. 
A) capitalized only when purchased. 
B) capitalized either when purchased or created internally. 
C) capitalized only when created internally. 
D) written off directly to retained earnings.

Question 12

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.
-Estimated goodwill by capitalizing average excess earnings at 14% is

Accepted Answer

A) $1,791,667 
B) $760,833 
C) $2,029,762 
D) $1,654,331 
A) $1,791,667 
B) $760,833 
C) $2,029,762 
D) $1,654,331

Which of the following statements best describes when previously recognized goodwill impairment may be reversed?

The general ledger of Babcock Corporation as of December 31, 2010, includes the following accounts: In the preparation of Babcock's balance sheet as of December 31, 2010, what should be reported as total intangible assets, excluding goodwill?

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 $10.2 million, and Jessup acquired a 75% share, goodwill can be calculated as

Wriglee, Ltd.went to court this year and successfully defended the brand name of its product, "Sweet Gum," from infringement by a competitor.The cost of this defence should be charged to

Which of the following methods of amortization is normally used for intangible assets?

On January 1, 2006, Robson Company purchased a trademark for $400,000, having an estimated useful life of 16 years.In January 2010, Robson paid $60,000 for legal fees in a successful defence of the trademark.Trademark amortization expense for the year ended December 31, 2010, should be

Which of the following statements best describes the accounting for intangible assets after acquisition under Private Entity GAAP?

The intangible asset goodwill may be

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

Exam 12: Intangible Assets and Goodwill

Which of the following statements best describes when previously recognized goodwill impairment may be reversed?

The general ledger of Babcock Corporation as of December 31, 2010, includes the following accounts: In the preparation of Babcock's balance sheet as of December 31, 2010, what should be reported as total intangible assets, excluding goodwill?

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 $10.2 million, and Jessup acquired a 75% share, goodwill can be calculated as

Wriglee, Ltd.went to court this year and successfully defended the brand name of its product, "Sweet Gum," from infringement by a competitor.The cost of this defence should be charged to

Which of the following methods of amortization is normally used for intangible assets?

On January 1, 2006, Robson Company purchased a trademark for $400,000, having an estimated useful life of 16 years.In January 2010, Robson paid $60,000 for legal fees in a successful defence of the trademark.Trademark amortization expense for the year ended December 31, 2010, should be

Which of the following statements best describes the accounting for intangible assets after acquisition under Private Entity GAAP?

The intangible asset goodwill may be

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