Exam 12: Intangible Assets

Use the following information for questions. On January 1, 2011, Bingham Inc.purchased a patent with a cost €1,160,000, 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 cost to sell the patent is estimated to be €540,000.The patent's value-in-use is estimated to be €565,000.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

On June 2, 2011, Lindt Inc.Purchased a trademark with a cost €9,440,000.The trademark is classified as an indefinite-life intangible asset.At December 31, 2011 and December 31, 2012, the following information is available for impairment testing: The 2012 income statement will report

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. -Bingham's 2012 income statement will report Loss on Impairment of

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

The general ledger of Vance Corporation as of December 31, 2011, includes the following accounts: In the preparation of Vance's statement of financial position as of December 31, 2011, what should be reported as total intangible assets?

Alonzo Co.acquires 3 patents from Shaq Corp.for a total of $360,000.The patents were carried on Shaq's books as follows: Patent AA: $5,000; Patent BB: $2,000; and Patent CC: $3,000.When Alonzo acquired the patents their fair values were: Patent AA: $20,000; Patent BB: $240,000; and Patent CC: $60,000.At what amount should Alonzo record Patent BB?

During 2011, Bond Company purchased the net assets of May Corporation for $1,000,000.On the date of the transaction, May had $300,000 of liabilities.The fair value of May's assets when acquired were as follows: How should the $500,000 difference between the fair value of the net assets acquired ($1,500,000) and the cost ($1,000,000) be accounted for by Bond?

In January, 2006, Findley Corporation purchased a patent for a new consumer product for $720,000.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 2011 the product was permanently removed from the market under governmental order because of a potential health hazard present in the product.What amount should Findley charge to expense during 2011, assuming amortization is recorded at the end of each year?

Which of the following costs of goodwill should be amortized over their estimated useful lives?

Thompson Company incurred research and development costs of $100,000 and legal fees of $40,000 to acquire a patent.The patent has a legal life of 20 years and a useful life of 10 years.What amount should Thompson record as Patent Amortization Expense in the first year?

Broadway Corporation was granted a patent on a product on January 1, 2000.To protect its patent, the corporation purchased on January 1, 2011 a patent on a competing product which was originally issued on January 10, 2007.Because of its unique plant, Broadway Corporation does not feel the competing patent can be used in producing a product.The cost of the competing patent should be

Rich Corporation purchased a limited-life intangible asset for $210,000 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?

Goodwill is considered a master valuation account because it measures the value of specifically identifiable intangible assets.

Which of the following costs should be excluded from research and development expense?

Danks Corporation purchased a patent for $450,000 on September 1, 2009.It had a useful life of 10 years.On January 1, 2011, Danks spent $110,000 to successfully defend the patent in a lawsuit.Danks feels that as of that date, the remaining useful life is 5 years.What amount should be reported for patent amortization expense for 2011?

Grande Company purchases Enfant Company for €13,985,000 cash on January 1, 2011.The book value of Enfant Company's net assets reported on its December 31, 2010 statement of financial position was €12,620,000.Grande's December 31, 2010 analysis indicated that the fair value of Enfant's tangible assets exceeded the book value by €560,000, and the fair value of identifiable intangible assets exceeded book value by €245,000.How much goodwill should be recognized by Grande Company when recording the purchase of Enfant?

Which of the following is not an intangible asset?

Recoveries of impairments for intangible long-lived asset are reported in "other income and expense" on the income statement.

Which of the following is not a criteria which must be met before development costs can be capitalized?

The total amount of patent cost amortized to date is usually