Question 1

IFRS requires start-up costs and initial operating losses during the early years be capitalized.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would not be considered an R & D activity?

Accepted Answer

A) Adaptation of an existing capability to a particular requirement or customer's need. 
B) Application of research findings or other knowledge to a plan for a new product or process. 
C) Laboratory research aimed at discovery of new knowledge. 
D) Conceptual formulation and design of possible product or process alternatives. 
A) Adaptation of an existing capability to a particular requirement or customer's need. 
B) Application of research findings or other knowledge to a plan for a new product or process. 
C) Laboratory research aimed at discovery of new knowledge. 
D) Conceptual formulation and design of possible product or process alternatives.

Question 3

Some intangible assets are not required to be amortized every year.

Accepted Answer

A) True 
 B)False

Question 4

All of the following are true regarding recovery of impairments for intangible assets except:

Accepted Answer

A) After a recovery of impairment has been recognized, the carrying value of the asset reported on the statement of financial position will be the higher of the fair value less cost to sell or the value-in-use. 
B) No recovery of impairment is allowed for Goodwill. 
C) A recovery of impairment will be reported in the "Other income and expense" section of the income statement. 
D) The amount of the recovery is limited to the carrying value of the asset that would have been reported had no impairment occurred. 
A) After a recovery of impairment has been recognized, the carrying value of the asset reported on the statement of financial position will be the higher of the fair value less cost to sell or the value-in-use. 
B) No recovery of impairment is allowed for Goodwill. 
C) A recovery of impairment will be reported in the "Other income and expense" section of the income statement. 
D) The amount of the recovery is limited to the carrying value of the asset that would have been reported had no impairment occurred.

Question 5

Chow Company purchased the Chee Division in 2011 and appropriately recorded HK$5,000,000 of goodwill related to the purchase.On December 31, 2011, the recoverable amount of Chee Division is HK$58,000,000 and it is carried on Chow's books for a total of HK$54,000,000, including the goodwill.What goodwill impairment should be recognized by Chow in 2011?

Accepted Answer

A) HK$0. 
B) HK$1,000,000. 
C) HK$4,000,000. 
D) HK$11,000,000. 
A) HK$0. 
B) HK$1,000,000. 
C) HK$4,000,000. 
D) HK$11,000,000.

Question 6

If the recoverable amount of an indefinite-life intangible other than goodwill is less than its carrying value, an impairment loss must be recognized.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) $ 800,000 
B) $ 940,000 
C) $1,300,000 
D) $1,640,000 
A) $ 800,000 
B) $ 940,000 
C) $1,300,000 
D) $1,640,000

Question 8

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 9

In a business combination, a company assigns the cost, where possible, to the identifiable tangible and intangible assets, with the remainder recorded as goodwill.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following intangible assets should be shown as a separate item on the statement of financial position?

Accepted Answer

A) Goodwill 
B) Franchise 
C) Patent 
D) Trademark 
A) Goodwill 
B) Franchise 
C) Patent 
D) Trademark

Question 11

Tokyo Enterprises has four divisions.It acquired on of them, Green Products, on January 1, 2011 for ¥480,000,000, and recorded goodwill of ¥60,900 as a result of that purchase.At December 31, 2011, Green Products had a recoverable amount of ¥444,000,000.The carrying value of the Company's net assets at December 31, 2011 was ¥426,000,000(including goodwill).What amount of loss on impairment of goodwill should Tokyo record in 2011?

Accepted Answer

A) ¥ -0- 
B) ¥18,000,000 
C) ¥36,000,000 
D) ¥54,000,000 
A) ¥ -0- 
B) ¥18,000,000 
C) ¥36,000,000 
D) ¥54,000,000

Question 12

Which of the following costs incurred internally to create an intangible asset is generally expensed?

Accepted Answer

A) Research phase costs. 
B) Filing costs. 
C) Legal costs. 
D) All of the above. 
A) Research phase costs. 
B) Filing costs. 
C) Legal costs. 
D) All of the above.

Question 13

How should research and development costs be accounted for, according to an IASB Statement?

Accepted Answer

A) Must be capitalized when incurred and then amortized over their estimated useful lives. 
B) Must be expensed in the period incurred. 
C) May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved. 
D) Must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable. 
A) Must be capitalized when incurred and then amortized over their estimated useful lives. 
B) Must be expensed in the period incurred. 
C) May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved. 
D) Must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable.

Question 14

Costs incurred internally to create intangibles are

Accepted Answer

A) capitalized. 
B) capitalized if they have an indefinite life. 
C) expensed as incurred. 
D) expensed only if they have a limited life. 
A) capitalized. 
B) capitalized if they have an indefinite life. 
C) expensed as incurred. 
D) expensed only if they have a limited life.

Question 15

Loazia Inc.incurred the following costs during the year ended December 31, 2011:   The total amount to be classified and expensed as research and development in 2011 is

Accepted Answer

A) $555,000. 
B) $855,000. 
C) $585,000. 
D) $285,000. 
A) $555,000. 
B) $855,000. 
C) $585,000. 
D) $285,000.

Question 16

Operating losses incurred during the start-up years of a new business should be

Accepted Answer

A) accounted for and reported like the operating losses of any other business. 
B) written off directly against retained earnings. 
C) capitalized as a deferred charge and amortized over five years. 
D) capitalized as an intangible asset and amortized over a period not to exceed 20 years. 
A) accounted for and reported like the operating losses of any other business. 
B) written off directly against retained earnings. 
C) capitalized as a deferred charge and amortized over five years. 
D) capitalized as an intangible asset and amortized over a period not to exceed 20 years.

Question 17

All intangibles are subject to periodic consideration of impairment with corresponding potential write-downs.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following costs should be capitalized in the year incurred?

Accepted Answer

A) Research and development costs. 
B) Costs to internally generate goodwill. 
C) Organizational costs. 
D) Costs to successfully defend a patent. 
A) Research and development costs. 
B) Costs to internally generate goodwill. 
C) Organizational costs. 
D) Costs to successfully defend a patent.

Question 19

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 CHF470,000 and Loss on Impairment of CHF20,000. 
C) Amortization Expense of CHF470,000 and a Recovery of Impairment of CHF90,000. 
D) Loss on impairment of 380,000. 
A) Amortization Expense of CHF470,000. 
B) Amortization Expense of CHF470,000 and Loss on Impairment of CHF20,000. 
C) Amortization Expense of CHF470,000 and a Recovery of Impairment of CHF90,000. 
D) Loss on impairment of 380,000.

Question 20

Wriglee, Inc.went to court this year and successfully defended its patent from infringe-ment by a competitor.The cost of this defense should be charged to

Accepted Answer

A) patents and amortized over the legal life of the patent. 
B) legal fees and amortized over 5 years or less. 
C) expenses of the period. 
D) patents and amortized over the remaining useful life of the patent. 
A) patents and amortized over the legal life of the patent. 
B) legal fees and amortized over 5 years or less. 
C) expenses of the period. 
D) patents and amortized over the remaining useful life of the patent.

Exam 12: Intangible Assets

IFRS requires start-up costs and initial operating losses during the early years be capitalized.

Which of the following would not be considered an R & D activity?

Some intangible assets are not required to be amortized every year.

All of the following are true regarding recovery of impairments for intangible assets except:

If the recoverable amount of an indefinite-life intangible other than goodwill is less than its carrying value, an impairment loss must be recognized.

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

The intangible asset goodwill may be

In a business combination, a company assigns the cost, where possible, to the identifiable tangible and intangible assets, with the remainder recorded as goodwill.

Which of the following intangible assets should be shown as a separate item on the statement of financial position?

Which of the following costs incurred internally to create an intangible asset is generally expensed?

How should research and development costs be accounted for, according to an IASB Statement?

Costs incurred internally to create intangibles are

Loazia Inc.incurred the following costs during the year ended December 31, 2011: The total amount to be classified and expensed as research and development in 2011 is

Operating losses incurred during the start-up years of a new business should be

All intangibles are subject to periodic consideration of impairment with corresponding potential write-downs.

Which of the following costs should be capitalized in the year incurred?

Wriglee, Inc.went to court this year and successfully defended its patent from infringe-ment by a competitor.The cost of this defense should be charged to

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

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