Acct 302- Intangibles MC

Which of the following represents a federally granted right? Franchise. Internet domain names. Copyrights. Goodwill.

Copyrights.

Which of the following intangible assets should be shown as a separate item on the balance sheet? Goodwill Franchise Patent Trademark

Goodwill

Which of the following intangible assets cannot be sold by a business to raise needed cash for a capital project? Patent. Copyright. Goodwill. Brand Name.

Goodwill.

After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Which of the following statements about subsequent reversal of a previously recognized impairment loss is correct? It must be disclosed in the notes to the financial statements. It is prohibited. It is required when the reversal is considered permanent. It is encouraged, but not required.

It is prohibited.

Grayson Co. incurred significant costs in defending its patent rights. Which of the following is the appropriate treatment of the related litigation costs? Litigation costs would be expensed regardless of the outcome of the litigation. Litigation costs would be capitalized if the patent right is successfully defended. Litigation costs would be capitalized only if the patent was purchased rather than internally developed. Litigation costs would be capitalized regardless of the outcome of the litigation.

Litigation costs would be capitalized if the patent right is successfully defended.

Which of the following methods of amortization is normally used for intangible assets? Sum-of-the-years'-digits Straight-line Units of production Double-declining-balance

Straight-line

Which of the following does not describe intangible assets? They lack physical existence. They are financial instruments. They provide long-term benefits. They are classified as long-term assets.

They are financial instruments.

Which of the following should be reported under the "Other Expenses and Losses" section of the income statement? Goodwill impairment losses. Trade name amortization expense. Patent impairment losses. Loss on sale of patent.

Trade name amortization expense.

The excess cost of the purchase over the fair market value of a company's identifiable net assets is sometimes referred to as all of these answer choices are correct. a gap filler. goodwill. a master valuation account.

all of these answer choices are correct.

The cost of successfully defending a patent suit should be charged off in the current period. amortized over the legal life of the purchased patent. added to factory overhead and allocated to production of the product. amortized over the remaining estimated useful life of the patent.

amortized over the remaining estimated useful life of the patent.

When the purchaser in a business combination pays less then the fair value of the identifiable net assets, such a situation is referred to as a: goodwill purchase. bargain purchase. residual purchase. blanket purchase.

bargain purchase.

Costs incurred internally to create intangibles are capitalized. capitalized if they have an indefinite life. expensed as incurred. expensed only if they have a limited life.

expensed as incurred.

Capitalizing goodwill only when it is purchased in an arm's-length transaction, and not capitalizing any goodwill generated internally, is an example of faithful representation winning out over relevance. financial accounting winning out over managerial accounting. GAAP winning out over IFRS. accrual accounting winning out over cash-basis accounting.

faithful representation winning out over relevance.

Companies should test indefinite life intangible assets at least annually for recoverability. amortization. impairment. estimated useful life.

impairment.

A purchased limited-life intangible asset ______ amortized and is impairment tested using _______________. is not; the recoverability test and then the fair value test is; the fair value test only is not; the fair value test only is; the recoverability test and then the fair value test

is; the recoverability test and then the fair value test

Under current accounting practice, intangible assets are classified as amortizable or unamortizable. limited-life or indefinite-life. specifically identifiable or goodwill-type. legally restricted or goodwill-type.

limited-life or indefinite-life.

Goodwill may be recorded when it is identified within a company. one company acquires another in a business combination. the fair value of a company's assets exceeds their cost. a company has exceptional customer relations.

one company acquires another in a business combination.

Wriglee, Inc. went to court this year and successfully defended its patent from infringement by a competitor. The cost of this defense should be charged to patents and amortized over the legal life of the patent. legal fees and amortized over 5 years or less. expenses of the period. patents and amortized over the remaining useful life of the patent.

patents and amortized over the remaining useful life of the patent.

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? A brand name. A patent. A customer list. All of these answer choices are correct

All of these answer choices are correct

Intangible assets are reported on the balance sheet with an accumulated depreciation account. in the property, plant, and equipment section. separately from other assets. none of these answer choices are correct.

separately from other assets.

The carrying value of an intangible is the fair value of the asset at a balance sheet date. the asset's acquisition cost less the total related amortization recorded to date. equal to the balance of the related accumulated amortization account. the assessed value of the asset for intangible tax purposes.

the asset's acquisition cost less the total related amortization recorded to date.

The controversy surrounding the policy to expense all research and development costs associated with internally created intangible assets results in understating assets and understating expenses. overstating assets and overstating expenses. overstating assets and understating expenses. understating assets and overstating expenses.

understating assets and overstating expenses.

Which of the following costs of goodwill should be amortized over their estimated useful lives? Costs of goodwill from a Costs of developing business combination goodwill internally No No Yes No No Yes Yes Yes

No No

A company reported $6 million of goodwill in last year's statement of financial position. How should the company account for the reported goodwill in the current year? Determine the current year's amortizable amount and report the current-year's amortization expense. Determine whether the fair value of the reporting unit is greater than the carrying amount and report a gain on goodwill in the income statement. Perform a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying value. Determine whether the fair value of the reporting unit is greater than the carrying amount and report the recovery of any previous impairment in the income statement.

Perform a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying value.

Which of the following intangible assets should not be amortized? Copyrights Customer lists Perpetual franchises All of these intangible assets should be amortized.

Perpetual franchises

Which of the following costs incurred internally to create an intangible asset is generally expensed? Research and development costs. Filing costs. Legal costs. All of these answer choices are correct.

Research and development costs.