Acctg 201: Chapter 7 Learnsmart Questions
Intangibles that are created by a company are referred to as what?
Internally developed intangibles
The accounting for copyrights uses the same accounting rules as what?
It uses the same rules as patents
When is goodwill recognized?
It's only recognized in a business acquisition
Service life of copyright
Life of creator plus 70 years
Copyright definition
Protected by law and gives the creator of a published work the exclusive rights to reproduce and sell the work for the life of the creator plus 70 years
Goodwill definition
Recorded by the acquiring company for the amount that the purchase price exceeds the fair value of the acquired company's identifiable net assets
What is the depreciation method that allocates an equal amount of the depreciable base to each year of the asset's service life?
Straight-line method
Service life of trademark?
10 years renewable, possibly indefinite
Service life of patent
20 years
Amortization definition
The cost collection process for intangible assets
Patent definition
The exclusive legal right to manufacture a product or to use a process
What is capitalized as an intangible asset for a franchise?
The initial payment for the franchise is considered an intangible asset
How is the depreciable cost of an asset calculated?
(Asset's cost) - (estimated residual value)
Straight line depreciation formula
(Cost-residual value)/service life
Trademark definition
An exclusive right to display a word, slogan, symbol, or emblem that distinctively identifies a company, product, or service
If a company generates its own goodwill through advertising or training, how should these costs be treated?
They should expense the costs as incurred
How long are trademarks protected for?
They're protected for 10 years
Which items are capitalized into the cost of a patent?
Filing fees, purchase price, attorney fees to secure patent
What is the service life of goodwill?
Indefinite
Franchise definition
A contractual agreement in which one entity grants the purchaser the exclusive right to use the trade name, formulas, and product rights within a specific geographic area for a specific period of time.
Depreciation definition
Allocation of the cost of a tangible fixed asset
Depletion
Allocation of the cost of natural resources
Service life of franchise?
Contract term
Which costs are capitalized into the cost of a trademark?
Design costs, registration fees, fees for a successful legal defense
Should research and development be classified as an asset or expense?
Expense on the income statement
