Chat with AIExam 10: Long-Term Assets Ii: Investments and Intangibles
Pence Corporation,which accounts for its investments in the common stock of Walsh Company by the equity method,should ordinarily record a dividend received from Walsh as
(41) 
VerifiedC
Changes in the fair value of a long-term available for sale equity securities portfolio should be reported as a component of
(43) VerifiedA
What is an intangible asset? How is the cost of an intangible asset amortized?
(26) VerifiedIntangibles are capital assets having no physical existence whose value depends on the rights and benefits that possession confers to the owner. Intangible assets derive their value from the special rights and privileges that they convey,and accounting for these assets involves the same problems as accounting for other long-term assets.Specifically,an initial carrying amount must be determined and then systematically and rationally allocated to the periods that receive benefit. Intangible assets other than goodwill are divided into two groups: those with indefinite lives and those with finite lives.An acquired intangible asset's useful life is determined by reviewing various factors such as its expected use,related assets,legal regulatory or contractual provisions,the effects of obsolescence,and the level of required maintenance.If no legal,regulatory,contractual,or other factor limits an intangible asset's useful life,it is considered to have an indefinite life.Intangible assets that are not amortized must be tested for impairment at least annually by comparing the fair values of those assets with their recorded amounts and/or amortized over their remaining useful lives.Intangible assets that have finite useful lives will continue to be amortized over their useful lives.
Under the equity method of accounting for investments,an investor recognizes its share of the earnings in the period in which the
(36) The theoretical justification for expensing research and development R&D)cost as it is incurred is based on which of the following arguments?
(40) How are income and balance sheet values determined under the equity method?
(35) The physical capital maintenance concept of income would require that an investment in the common stock of another entity be
(39) Discuss accounting for equity securities under the SFAS No.115 now contained at FASB ASC 320.
(38) Zink Company owns 32% of Ace Company's outstanding voting stock.Zink Company normally should account for its investment in Ace Company using the
(30) A net unrealized loss on a company's long-term portfolio of available for sale securities should be reflected in the current financial statements as
(37) Pacer Company purchased 300 of the 1,000 outstanding shares of Queen Company's common stock for $80,000 on January 2,2012.During 2013,Queen Company declared dividends of $8,000 and reported earnings for the year of $20,000. If Pacer Company uses the equity method of accounting for its investment in Queen Company,its Investment in Queen Company account at December 31,2013 should be
(32) When a patent is successfully defended in court,the cost of the lawsuit
(37) When a company reports goodwill in its balance sheet,we know that
(31) A purchased patent has a remaining life of 15 years.It should be
(31) On January 15,2005,a corporation was granted a patent on a product.On January 2,2013,to protect its patent,the corporation purchased a patent on a competing product the originally was issued on January 10,2011.Because of its unique plant,the corporation does not feel the competing patent can be used in producing a product.The cost of the competing patent should be
(35) An investor purchased a bond as a long-term investment on January 1.Annual interest was received on December 31.The investor's interest income for the year would be lowest if the bond was purchased at
(35) 
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