Exam 12: Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

During its first year of operation,Dovery Company incurred $345,000 of research costs undertaken with the prospect of gaining new technical understanding about a new nanotechnology procedure.An additional $515,000 was incurred to develop a production process to use that new technology to produce a new lubricant product.Under U.S.GAAP,which of the following is the appropriate accounting for these costs?

The two classes of intangible assets are finite-life assets and infinite-life assets.

Which of the following information is not used to determine current period depreciation expense associated with a specific asset?

Rommer Company purchases Daley Inc.for $960,000 cash on January 1,2017.The book value of Daley Company's net assets,as reflected on its December 31,2016 statement of financial position is $740,000.An analysis by Rommer on December 31,2016 indicates that the fair value of Daley's tangible assets exceeded the book value by $70,000,and the fair value of identifiable intangible assets exceeded book value by $35,000.How much goodwill should be recognized by Rommer Company when recording the purchase of Daley Inc.?

Which of the following is an exclusive right to reproduce and sell an original creative work?

IFRS requires that firms must expense all R&D costs as incurred.

IFRS requires that firms expense costs during a research phase but allows firms to capitalize development-phase costs under certain conditions.Under IFRS,which of the following is not a condition that must be met for a firm to capitalize development-phase expenditures?

Bakiponi Corp.provides the following data from its recent financial statements: What is the average age of the company's fixed assets as of the end of 2017?

Rinky-Dink Inc.incurred research and development costs of $200,000 and legal fees of $100,000 to acquire a patent.The patent has a legal life of 20 years and a useful life of 10 years.What amount should the company record as patent amortization expense in the first year?

Assets that qualify for interest cost capitalization include ________.

Which of the following is a characteristic of intangible assets?

IFRS permits capitalization of interest on specific borrowings related to both constructed and purchased assets.

For constructed assets,the amount of capitalized interest is calculated as total construction costs times the applicable interest rate.

All fixed assets with a useful life of more than one year must be capitalized and depreciated.

Which of the following expenditures made subsequent to acquisition should be fully expensed in the period the expenditure is made?

Which of the following is a finite-life intangible asset?

Scrap value is also referred to as depreciable value.

Finite-life assets include patents and trademarks.

What criteria does a company use to decide whether to include an expenditure in the cost of property,plant,and equipment rather than expensing it? Provide an example of a type of expenditure included in the cost of property,plant,and equipment as a result of applying these criteria.

Goodwill is recognized only when the purchase price of a company is greater than the fair value of the assets of that company.