Question 1

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 2

Under current accounting practice, intangible assets are classified as

Accepted Answer

A) amortizable or unamortizable. 
B) limited-life or indefinite-life. 
C) specifically identifiable or goodwill-type. 
D) legally restricted or goodwill-type. 
A) amortizable or unamortizable. 
B) limited-life or indefinite-life. 
C) specifically identifiable or goodwill-type. 
D) legally restricted or goodwill-type.

Question 3

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 4

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.

Accepted Answer

A) True 
 B)False

Question 5

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 6

The total amount of patent cost amortized to date is usually

Accepted Answer

A) shown in a separate Accumulated Patent Amortization account which is shown contra to the Patent account. 
B) shown in the current income statement. 
C) reflected as credits in the Patent account. 
D) reflected as a contra property, plant and equipment item. 
A) shown in a separate Accumulated Patent Amortization account which is shown contra to the Patent account. 
B) shown in the current income statement. 
C) reflected as credits in the Patent account. 
D) reflected as a contra property, plant and equipment item.

Question 7

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 these choices are correct. 
A) Goodwill impairment losses. 
B) Trade name amortization expense. 
C) Recovery of impairment losses 
D) All of these choices are correct.

Question 8

When a new company is acquired, which of these intangible assets, unrecorded on the acquired company's books, might be recorded in addition to goodwill?

Accepted Answer

A) A trade name. 
B) A patent. 
C) A customer list. 
D) All of the above. 
A) A trade name. 
B) A patent. 
C) A customer list. 
D) All of the above.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Periodic alterations to existing products are an example of research and development costs.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) other assets. 
B) indirect costs. 
C) goodwill. 
D) a bargain purchase. 
A) other assets. 
B) indirect costs. 
C) goodwill. 
D) a bargain purchase.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Which of the following intangible assets could not be sold by a business to raise needed cash for a capital project?

Accepted Answer

A) Patent. 
B) Copyright. 
C) Goodwill. 
D) Trade name. 
A) Patent. 
B) Copyright. 
C) Goodwill. 
D) Trade name.

Question 15

The cost of purchased patents should be amortized over the remaining legal life of the patent.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) the Patents account. 
B) an Accumulated Amortization account. 
C) an Accumulated Depreciation account. 
D) an expense account. 
A) the Patents account. 
B) an Accumulated Amortization account. 
C) an Accumulated Depreciation account. 
D) an expense account.

Question 17

Research and development costs are recorded as an intangible asset if it is felt they will provide economic benefits in future years.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

A patent should be amortized over

Accepted Answer

A) twenty years. 
B) its useful life. 
C) its useful life or twenty years, whichever is longer. 
D) its useful life or twenty years, whichever is shorter. 
A) twenty years. 
B) its useful life. 
C) its useful life or twenty years, whichever is longer. 
D) its useful life or twenty years, whichever is shorter.

Question 20

Purchased goodwill should

Accepted Answer

A) be written off as soon as possible against retained earnings. 
B) be written off as soon as possible as an other expense item. 
C) be written off by systematic charges as a regular operating expense over the period benefited. 
D) not be amortized. 
A) be written off as soon as possible against retained earnings. 
B) be written off as soon as possible as an other expense item. 
C) be written off by systematic charges as a regular operating expense over the period benefited. 
D) not be amortized.

Exam 12: Intangible Assets

Which characteristic is not possessed by intangible assets?

Under current accounting practice, intangible assets are classified as

Costs incurred internally to create intangibles are

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.

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

The total amount of patent cost amortized to date is usually

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

When a new company is acquired, which of these intangible assets, unrecorded on the acquired company's books, might be recorded in addition to goodwill?

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

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

Periodic alterations to existing products are an example of research and development costs.

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

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

Which of the following intangible assets could not be sold by a business to raise needed cash for a capital project?

The cost of purchased patents should be amortized over the remaining legal life of the patent.

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

Research and development costs are recorded as an intangible asset if it is felt they will provide economic benefits in future years.

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

A patent should be amortized over

Purchased goodwill should

Financial Reporting and Accounting Standards

Conceptual Framework for Financial Reporting

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 Recognition

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 Financialreporting

Filters