Question 1

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 2

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 3

A recovery of impairment for an intangible long-lived asset is limited to the carrying value that would have been reported had the impairment not occurred.

Accepted Answer

A) True 
 B)False

Question 4

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 5

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

Accepted Answer

A) The company has sufficient financial resources to complete the project. 
B) The company intends to complete the project and either use or sell the intangible asset. 
C) The company can reliably identify the research costs incurred to bring the project to economic feasibility. 
D) The project has achieved technical feasibility. 
A) The company has sufficient financial resources to complete the project. 
B) The company intends to complete the project and either use or sell the intangible asset. 
C) The company can reliably identify the research costs incurred to bring the project to economic feasibility. 
D) The project has achieved technical feasibility.

Question 6

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.

Accepted Answer

A) True 
 B)False

Question 7

Research phase costs are capitalized as an intangible asset once the project has economic viability.

Accepted Answer

A) True 
 B)False

Question 8

Start-up costs include organizational costs, such as legal and state fees incurred to organize a new business entity.These costs should be

Accepted Answer

A) capitalized and never amortized. 
B) capitalized and amortized over 40 years. 
C) capitalized and amortized over 5 years. 
D) expensed as incurred. 
A) capitalized and never amortized. 
B) capitalized and amortized over 40 years. 
C) capitalized and amortized over 5 years. 
D) expensed as incurred.

Question 9

The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be

Accepted Answer

A) charged off in the current period. 
B) amortized over the legal life of the purchased patent. 
C) added to factory overhead and allocated to production of the purchaser's product. 
D) amortized over the remaining estimated life of the original patent covering the product whose market would have been impaired by competition from the newly patented product. 
A) charged off in the current period. 
B) amortized over the legal life of the purchased patent. 
C) added to factory overhead and allocated to production of the purchaser's product. 
D) amortized over the remaining estimated life of the original patent covering the product whose market would have been impaired by competition from the newly patented product.

Question 10

Companies should evaluate indefinite life intangible assets at least annually for:

Accepted Answer

A) recoverability. 
B) amortization. 
C) impairment. 
D) estimated useful life. 
A) recoverability. 
B) amortization. 
C) impairment. 
D) estimated useful life.

Question 11

Broadway Corporation was granted a patent on a product on January 1, 2004.To protect its patent, the corporation purchased on January 1, 2015 a patent on a competing product which was originally issued on January 10, 2011.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

Accepted Answer

A) amortized over a maximum period of 20 years. 
B) amortized over a maximum period of 16 years. 
C) amortized over a maximum period of 9 years. 
D) expensed in 2015. 
A) amortized over a maximum period of 20 years. 
B) amortized over a maximum period of 16 years. 
C) amortized over a maximum period of 9 years. 
D) expensed in 2015.

Question 12

Intangible assets are reported on the statement of financial position

Accepted Answer

A) with an accumulated depreciation account. 
B) in the property, plant, and equipment section. 
C) as a separate item. 
D) None of these choices are correct. 
A) with an accumulated depreciation account. 
B) in the property, plant, and equipment section. 
C) as a separate item. 
D) None of these choices are correct.

Question 13

Which of the following research and development related costs should be capitalized and depreciated over current and future periods?

Accepted Answer

A) Research and development general laboratory building which can be put to alternative uses in the future 
B) Inventory used for a specific research project 
C) Administrative salaries allocated to research and development 
D) Research findings purchased from another company to aid a particular research project currently in process 
A) Research and development general laboratory building which can be put to alternative uses in the future 
B) Inventory used for a specific research project 
C) Administrative salaries allocated to research and development 
D) Research findings purchased from another company to aid a particular research project currently in process

Question 14

The cost of an intangible asset includes all of the following except

Accepted Answer

A) purchase price. 
B) legal fees. 
C) other incidental expenses. 
D) all of these are included. 
A) purchase price. 
B) legal fees. 
C) other incidental expenses. 
D) all of these are included.

Question 15

Which of the following principles best describes the current method of accounting for research and development costs?

Accepted Answer

A) Associating cause and effect 
B) Systematic and rational allocation 
C) Income tax minimization 
D) Immediate recognition as an expense 
A) Associating cause and effect 
B) Systematic and rational allocation 
C) Income tax minimization 
D) Immediate recognition as an expense

Question 16

Which of the following costs would not be capitalized?

Accepted Answer

A) Acquisition cost of equipment to be used on current and future research projects. 
B) Engineering costs incurred to advance the project to the full production stage. 
C) Cost incurred to file for patent. 
D) Cost of testing prototype before economic feasibility has been demonstration. 
A) Acquisition cost of equipment to be used on current and future research projects. 
B) Engineering costs incurred to advance the project to the full production stage. 
C) Cost incurred to file for patent. 
D) Cost of testing prototype before economic feasibility has been demonstration.

Question 17

Recovery of impairment is recognized for all the following except

Accepted Answer

A) Patent held for sale. 
B) Patent held for use. 
C) Trademark. 
D) Goodwill. 
A) Patent held for sale. 
B) Patent held for use. 
C) Trademark. 
D) Goodwill.

Question 18

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 19

Which of the following costs would be capitalized?

Accepted Answer

A) Acquisition cost of equipment to be used on current research project only. 
B) Engineering costs incurred to advance the product to the full production stage. 
C) Cost of research to determine whether a market for the product exists. 
D) Salaries of research staff. 
A) Acquisition cost of equipment to be used on current research project only. 
B) Engineering costs incurred to advance the product to the full production stage. 
C) Cost of research to determine whether a market for the product exists. 
D) Salaries of research staff.

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 12: Intangible Assets

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

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.

A recovery of impairment for an intangible long-lived asset is limited to the carrying value that would have been reported had the impairment not occurred.

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

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

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.

Research phase costs are capitalized as an intangible asset once the project has economic viability.

Start-up costs include organizational costs, such as legal and state fees incurred to organize a new business entity.These costs should be

The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be

Companies should evaluate indefinite life intangible assets at least annually for:

Intangible assets are reported on the statement of financial position

Which of the following research and development related costs should be capitalized and depreciated over current and future periods?

The cost of an intangible asset includes all of the following except

Which of the following principles best describes the current method of accounting for research and development costs?

Which of the following costs would not be capitalized?

Recovery of impairment is recognized for all the following except

Which of the following does not describe intangible assets?

Which of the following costs would be capitalized?

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

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

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