Question 1

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

Accepted Answer

A) Sum-of-the-years'-digits 
B) Straight-line 
C) Units of production 
D) Double-declining-balance 
A) Sum-of-the-years'-digits 
B) Straight-line 
C) Units of production 
D) Double-declining-balance

Question 2

Use the following information for questions.
On January 1, 2011, Dillman Inc.purchased a patent with a cost €3,480,000, a useful life of 5 years.The company uses straight-line depreciation.At December 31, 2012, the company determines that impairment indicators are present.The fair value less costs to sell the patent is estimated to be €1,620,000.The patent's value-in-use is estimated to be €1,695,000.The asset's remaining useful life is estimated to be 2 years.
-The company's 2013 income statement will report amortization expense for the patent of

Accepted Answer

A) €565,000. 
B) €696,000. 
C) €847,500. 
D) €1,695,000. 
A) €565,000. 
B) €696,000. 
C) €847,500. 
D) €1,695,000.

Question 3

India Enterprises has four divisions.It acquired one of them, Bombay Products, on January 1, 2011 for Rs400,000,000, and recorded goodwill of Rs50,750,000 as a result of that purchase.At December 31, 2011, Bombay products had a recoverable amount of Rs370,000,000.The carrying value of the company's net assets at December 31, 2011 was Rs355,000,000 (including goodwill).What amount of loss on impairment of goodwill should India record in 2011?

Accepted Answer

A) Rs -0- 
B) Rs15,000,000 
C) Rs30,000,000 
D) Rs45,000,000 
A) Rs -0- 
B) Rs15,000,000 
C) Rs30,000,000 
D) Rs45,000,000

Question 4

The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned.

Accepted Answer

A) True 
 B)False

Question 5

Use the following information for questions.
On January 2, 2011, Ace Inc.purchased a patent with a cost CHF1,880,000, and a useful life of 4 years.At December 31, 2011, and December 31, 2012, the company determines that impairment indicators are present.The following information is available for impairment testing at each year end:   
No changes were made in the asset's estimated useful life.
-The company's 2012 income statement will report

Accepted Answer

A) Amortization Expense of CHF470,000. 
B) Amortization Expense of CHF500,000 and Loss on Impairment of CHF110,000. 
C) Amortization Expense of CHF470,000 and a Loss of Impairment of CHF50,000. 
D) Loss on impairment of 140,000. 
A) Amortization Expense of CHF470,000. 
B) Amortization Expense of CHF500,000 and Loss on Impairment of CHF110,000. 
C) Amortization Expense of CHF470,000 and a Loss of Impairment of CHF50,000. 
D) Loss on impairment of 140,000.

Question 6

The reason goodwill is sometimes referred to as a master valuation account is because

Accepted Answer

A) it represents the purchase price of a business that is about to be sold. 
B) it is the difference between the fair value of the net identifiable assets as compared with the purchase price of the acquired business. 
C) the value of a business is computed without consideration of goodwill and then goodwill is added to arrive at a master valuation. 
D) it is the only account in the financial statements that is based on value, all other accounts are recorded at an amount other than their value. 
A) it represents the purchase price of a business that is about to be sold. 
B) it is the difference between the fair value of the net identifiable assets as compared with the purchase price of the acquired business. 
C) the value of a business is computed without consideration of goodwill and then goodwill is added to arrive at a master valuation. 
D) it is the only account in the financial statements that is based on value, all other accounts are recorded at an amount other than their value.

Question 7

On June 30, 2011, Cey, Inc.exchanged 2,000 shares of Seely Corp.$30 par value ordinary shares for a patent owned by Gore Co.The Seely stock was acquired in 2011 at a cost of $55,000.At the exchange date, Seely ordinary shares had a fair value of $46 per share, and the patent had a net carrying value of $110,000 on Gore's books.Cey should record the patent at

Accepted Answer

A) $55,000. 
B) $60,000. 
C) $92,000. 
D) $110,000. 
A) $55,000. 
B) $60,000. 
C) $92,000. 
D) $110,000.

Question 8

After an impairment loss is recorded for goodwill, 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 9

Ely Co.bought a patent from Baden Corp.on January 1, 2011, for $300,000.An independent consultant retained by Ely estimated that the remaining useful life at January 1, 2011 is 15 years.Its unamortized cost on Baden's accounting records was $150,000; the patent had been amortized for 5 years by Baden.How much should be amortized for the year ended December 31, 2011 by Ely Co.?

Accepted Answer

A) $0. 
B) $15,000. 
C) $20,000. 
D) $30,000. 
A) $0. 
B) $15,000. 
C) $20,000. 
D) $30,000.

Question 10

All research phase and development phase costs are expensed as incurred.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following does not describe intangible assets?

Accepted Answer

A) They lack physical existence. 
B) They are monetary assets. 
C) They provide long-term benefits. 
D) They are classified as long-term assets. 
A) They lack physical existence. 
B) They are monetary assets. 
C) They provide long-term benefits. 
D) They are classified as long-term assets.

Question 12

Which intangible assets are amortized?

Accepted Answer

The answer of Which intangible assets are amortized?  ...

Question 13

During 2011, Leon Co.incurred the following costs:   In Leon's 2011 income statement, research and development expense should be

Accepted Answer

A) $510,000. 
B) $935,000. 
C) $1,285,000. 
D) $1,535,000. 
A) $510,000. 
B) $935,000. 
C) $1,285,000. 
D) $1,535,000.

Question 14

Which of the following should not be reported under the "Other income and expense" section of the income statement?

Accepted Answer

A) Goodwill impairment losses. 
B) Trade name amortization expense. 
C) Recovery of impairment losses 
D) All of the above. 
A) Goodwill impairment losses. 
B) Trade name amortization expense. 
C) Recovery of impairment losses 
D) All of the above.

Question 15

Which characteristic is not possessed by intangible assets?

Accepted Answer

A) Physical existence. 
B) Identifiable. 
C) Result in future benefits. 
D) Expensed over current and\or future years. 
A) Physical existence. 
B) Identifiable. 
C) Result in future benefits. 
D) Expensed over current and\or future years.

Question 16

Use the following information for questions.
On January 2, 2011, Lutz Inc.purchased a patent with a cost CHF940,000 a useful life of 4 years.At December 31, 2011, and December 31, 2012, the company determines that impairment indicators are present.The following information is available for impairment testing at each year end:   
No changes were made in the asset's estimated useful life.
-The company's 2012 income statement will report

Accepted Answer

A) Amortization Expense of CHF235,000. 
B) Amortization Expense of CHF250,000 and Loss on Impairment of CHF55,000. 
C) Amortization Expense of CHF235,000 and a Loss of Impairment of CHF25,000. 
D) Loss on impairment of CHF70,000. 
A) Amortization Expense of CHF235,000. 
B) Amortization Expense of CHF250,000 and Loss on Impairment of CHF55,000. 
C) Amortization Expense of CHF235,000 and a Loss of Impairment of CHF25,000. 
D) Loss on impairment of CHF70,000.

Question 17

On May 5, 2011, MacDougal Corp.exchanged 2,000 shares of its $25 par value treasury ordinary shares for a patent owned by Masset Co.The treasury shares were acquired in 2010 for $45,000.At May 5, 2011, MacDougal's ordinary shares was quoted at $34 per share, and the patent had a carrying value of $55,000 on Masset's books.MacDougal should record the patent at

Accepted Answer

A) $45,000. 
B) $50,000. 
C) $55,000. 
D) $68,000. 
A) $45,000. 
B) $50,000. 
C) $55,000. 
D) $68,000.

Question 18

When a company develops a trademark the costs directly related to securing it should generally be capitalized.Which of the following costs associated with a trademark would not be allowed to be capitalized?

Accepted Answer

A) Attorney fees. 
B) Consulting fees. 
C) Research and development fees. 
D) Design costs. 
A) Attorney fees. 
B) Consulting fees. 
C) Research and development fees. 
D) Design costs.

Question 19

On June 2, 2011, Olsen Inc.purchased a trademark with a cost €4,720,000.The trademark is classified as an indefinite-life intangible asset.At December 31, 2011 and December 31, 2012, the following is available for impairment testing:   The 2012 income statement will report

Accepted Answer

A) no Impairment Loss or Recovery of Impairment. 
B) Impairment Loss of €40,000. 
C) Recovery of Impairment of €40,000. 
D) Recovery of Impairment of €100,000. 
A) no Impairment Loss or Recovery of Impairment. 
B) Impairment Loss of €40,000. 
C) Recovery of Impairment of €40,000. 
D) Recovery of Impairment of €100,000.

Question 20

Limited-life intangibles are amortized by systematic charges to expense over their useful life.

Accepted Answer

A) True 
 B)False

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

The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned.

The reason goodwill is sometimes referred to as a master valuation account is because

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

All research phase and development phase costs are expensed as incurred.

Which of the following does not describe intangible assets?

Which intangible assets are amortized?

During 2011, Leon Co.incurred the following costs: In Leon's 2011 income statement, research and development expense should be

Which of the following should not be reported under the "Other income and expense" section of the income statement?

Which characteristic is not possessed by intangible assets?

When a company develops a trademark the costs directly related to securing it should generally be capitalized.Which of the following costs associated with a trademark would not be allowed to be capitalized?

On June 2, 2011, Olsen Inc.purchased a trademark with a cost €4,720,000.The trademark is classified as an indefinite-life intangible asset.At December 31, 2011 and December 31, 2012, the following is available for impairment testing: The 2012 income statement will report

Limited-life intangibles are amortized by systematic charges to expense over their useful life.

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

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

Current Liabilities, Provisions, and Contingencies

Non-Current Liabilities

Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Presentation and Disclosure in Financial Reporting

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Exam 12: Intangible Assets

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

The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned.

The reason goodwill is sometimes referred to as a master valuation account is because

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

All research phase and development phase costs are expensed as incurred.

Which of the following does not describe intangible assets?

Which intangible assets are amortized?

During 2011, Leon Co.incurred the following costs: In Leon's 2011 income statement, research and development expense should be

Which of the following should not be reported under the "Other income and expense" section of the income statement?

Which characteristic is not possessed by intangible assets?

When a company develops a trademark the costs directly related to securing it should generally be capitalized.Which of the following costs associated with a trademark would not be allowed to be capitalized?

On June 2, 2011, Olsen Inc.purchased a trademark with a cost €4,720,000.The trademark is classified as an indefinite-life intangible asset.At December 31, 2011 and December 31, 2012, the following is available for impairment testing: The 2012 income statement will report

Limited-life intangibles are amortized by systematic charges to expense over their useful life.

Financial Accounting and Accounting Standards

Conceptual Framework Underlying Financial Accounting

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

Current Liabilities, Provisions, and Contingencies

Non-Current Liabilities

Equity

Dilutive Securities and Earnings Per Share

Investments

Revenue

Accounting for Income Taxes

Accounting for Pensions and Postretirement Benefits

Accounting for Leases

Accounting Changes and Error Analysis

Statement of Cash Flows

Presentation and Disclosure in Financial Reporting

Filters