Chapter 12 Part 2.2
Capitalized costs incurred while developing computer software to be sold should be amortized using the: a. lower of the straight-line method or the percent-of-revenue method. b. higher of the percent-of-revenue method or the percent-of-completion method. c. lower of the percent-of-revenue method or the percent-of-completion method. d. higher of the straight-line method or the percent-of-revenue method.
b
The notes to the financial statements should include information about acquired intangible assets, and aggregate amortization expense for how many succeeding years? a. 6 b. 5 c. 4 d. 3
b
Which of the following costs incurred with developing computer software for internal use should be capitalized? a. Evaluation of alternatives. b. Coding. c. Training. d. Maintenance.
b
Capitalized costs incurred to develop internal use computer software should be amortized using the: a. percent-of-revenue approach. b. percent-of-completion approach. c. straight-line approach. d. accelerated amortization approach.
c
Intangible assets are reported on the balance sheet a. with an accumulated depreciation account. b. in the property, plant, and equipment section. c. separately from other assets. d. none of the above.
c
Jeff Corporation purchased a limited-life intangible asset for $120,000 on May 1, 2008. It has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2010? a. $ -0- b. $24,000 c. $32,000 d. $36,000
c
Mini Corp. acquires a patent from Maxi Co. in exchange for 2,500 shares of Mini Corp.'s $5 par value common stock and $75,000 cash. When the patent was initially issued to Maxi Co., Mini Corp.'s stock was selling at $7.50 per share. When Mini Corp. acquired the patent, its stock was selling for $9 a share. Mini Corp. should record the patent at what amount? a. $87,500 b. $93,750 c. $97,500 d. $75,000
c
Alonzo Co. acquires 3 patents from Shaq Corp. for a total of $360,000. The patents were carried on Shaq's books as follows: Patent AA: $5,000; Patent BB: $2,000; and Patent CC: $3,000. When Alonzo acquired the patents their fair market values were: Patent AA: $20,000; Patent BB: $240,000; and Patent CC: $60,000. At what amount should Alonzo record Patent BB? a. $120,000 b. $240,000 c. $2,000 d. $270,000
d
Contreras Corporation acquired a patent on May 1, 2010. Contreras paid cash of $25,000 to the seller. Legal fees of $900 were paid related to the acquisition. What amount should be debited to the patent account? a. $900 b. $24,100 c. $25,000 d. $25,900
d
Lynne Corporation acquired a patent on May 1, 2010. Lynne paid cash of $30,000 to the seller. Legal fees of $1,000 were paid related to the acquisition. What amount should be debited to the patent account? a. $1,000 b. $29,000 c. $30,000 d. $31,000
d
The total amount of patent cost amortized to date is usually a. shown in a separate Accumulated Patent Amortization account which is shown contra to the Patent account. b. shown in the current income statement. c. reflected as credits in the Patent account. d. reflected as a contra property, plant and equipment item.
d
When developing computer software to be sold, which of the following costs should be capitalized? a. Designing. b. Coding. c. Testing. d. None of the above.
d
Which of the following is often reported as an extraordinary item? a. Amortization expense. b. Impairment losses for intangible assets other than goodwill. c. Impairment losses on goodwill. d. None of the above.
d
Which of the following is often reported as an extraordinary item? a. Amortization expense. b. Impairment losses for intangible assets. c. Research and development costs. d. None of the above.
d
Which of the following should be reported under the "Other Expenses and Losses" section of the income statement? a. Goodwill impairment losses. b. Trade name amortization expense. c. Patent impairment losses d. None of the above.
d