Exam 12: Intangible Assets

Malrom Manufacturing Company acquired a patent on a manufacturing process on January 1, 2010 for $5,000,000.It was expected to have a 10 year life and no residual value.Malrom uses straight-line amortization for patents.On December 31, 2011, the recoverable amount of the patent was estimated to be $3,400,000.At what amount should the patent be carried on the December 31, 2011 balance sheet?

If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent may be amortized over the life of the new patent.

MaBelle Corporation incurred the following costs in 2010: What amount should MaBelle record as research & development expense in 2010?

On August 1, 2011, Wei Inc.purchased a license with a cost of HK$8,424,000 and a useful life of 10 years.At December 31, 2013, when the carrying value of the asset was HK$6,388,200, the company determined that impairment indicators were present.The fair less costs to sell the license was estimated to be HK$5,909,120.The asset's value-in-use is estimated to be HK$6,084,000.Wei's 2013 income statement will report Loss on Impairment of

Accounting for impairments for limited-life intangible assets follows the same rules used to account for impairments of plant and equipment.

Internally generated goodwill should not be capitalized in the accounts.

Intangible assets derive their value from the right (claim) to receive cash in the future.

Impairment testing is conducted annually for both limited-life and indefinite-life intangible assets.

Lynne Corporation acquired a patent on May 1, 2010.Lynne paid cash of $30,000 to the seller.Legal fees of $1,000 were paid related to the acquisition.What amount should be debited to the patent account?

Which of the following costs would be capitalized?

When a patent is amortized, the credit is usually made to

Which of the following characteristics do intangible assets possess?

The cost of acquiring a customer list from another company is recorded as an intangible asset.

Jeff Corporation purchased a limited-life intangible asset for $120,000 on May 1, 2009.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, 2011?

In a business combination, the excess of the cost of the purchase over the fair value of the identifiable net assets purchased is:

Dotel Company's 12\31\10 statement of financial position reports assets of $6,000,000 and liabilities of $2,500,000.All of Dotel's assets' book values approximate their fair value, except for land, which has a fair value that is $400,000 greater than its book value.On 12\31\10, Egbert Corporation paid $6,100,000 to acquire Dotel.What amount of goodwill should Egbert record as a result of this purchase?

Which of the following would be considered research and development?

Harrel Company acquired a patent on an oil extraction technique on January 1, 2010 for $5,000,000.It was expected to have a 10 year life and no residual value.Harrel uses straight-line amortization for patents.On December 31, 2011, the recoverable amount of the patent was estimated to be $4,500,000.At what amount should the patent be carried on the December 31, 2011 balance sheet?

Mini Corp.acquires a patent from Maxi Co.in exchange for 2,500 shares of Mini Corp.'s $5 par value ordinary shares and $75,000 cash.When the patent was initially issued to Maxi Co., Mini Corp.'s shares were selling at $7.50 per share.When Mini Corp.acquired the patent, its shares were selling for $9 a share.Mini Corp.should record the patent at what amount?

Which of the following intangible assets should not be amortized?