Chapter 12

B

Internally generated intangible assets are initially recorded at fair value. A. True B. False

D

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

C

Northstar Co. acquired a registered trademark for $600,000. The trademark has a remaining legal life of five years, but can be renewed every 10 years for a nominal fee. Northstar expects to renew the trademark indefinitely. What amount of amortization expense should Northstar record for the trademark in the current year? A. $40,000 B. $120,000 C. $0 D. $15,000

A

The cost of acquiring a customer list from another company is recorded as an intangible asset. A. True B. False

B

The same recoverability test that is used for impairments of property, plant, and equipment is used for impairments of indefinite-life intangibles. A. True B. False

No Entry

Waters Corporation purchased Johnson Company 3 years ago and at that time recorded goodwill of $400,000. The Johnson Division's net assets, including the goodwill, have a carrying amount of $800,000. The fair value of the division is estimated to be $1,000,000.Prepare Waterss' journal entry, if necessary, to record impairment of the goodwill.

Dr. Loss on Impairment 50,000 Cr. Goodwill 50,000

Waters Corporation purchased Johnson Company 3 years ago and at that time recorded goodwill of $400,000. The Johnson Division's net assets, including the goodwill, have a carrying amount of $800,000. The fair value of the division is estimated to be $750,000.Prepare Waterss' journal entry, if necessary, to record impairment of the goodwill

C

Which of the following is not one of the major categories of intangibles? A. Marketing-related. B. Contract-related. C. Financing-related. D. Artistic-related.