Chapter 12

All of the following statements regarding IFRS accounting treatments for intangibles are true except:

under IFRS, costs in the development phase of R & D costs are expensed once economic viability is achieved.

The residual value of an intangible asset should be assumed to be ________ unless its useful life is less than its economic life.

zero

All of the following are similar to R & D costs:

advertising costs. start-up costs. initial operating losses.

factors to be considered in determining a limited-life intangible asset's useful life?

Any legal provisions that may limit the useful life. The expected useful life of any related asset. The effects of obsolescence.

How is the cost of an intangible asset that is acquired for shares determined?

At either the fair value of the consideration given or the fair value of the consideration received, whichever is more clearly evident.

Which of the following would be amortized?

Customer List.

Which of the following is not one of the major categories of intangibles?

Financing-related.

Which of the following intangible assets must be disclosed as a separate item on the statement of financial position under IFRS?

Goodwill

Which of the following is not an example of a limited-life intangible asset?

Goodwill.

Which of the following would not be amortized?

Goodwill.

All of the following are differences between IFRS and U. S. GAAP in accounting for intangible assets except:

IFRS, but not U. S. GAAP recognizes acquired In-process Research and Development as a separate intangible asset in a business combination.

Under __________ , development costs are capitalized after economic feasibility has been achieved but under ____________, should continue to be expensed.

IFRS; U.S. GAAP

Trademarks fall under which category of intangible assets?

Marketing-related.

Which of the following is an example of a limited life intangible asset?

Patent

Legal fees and other costs incurred in successfully defending a patent suit are debited to:

Patents

Which of the following is not allowable under IFRS?

Recovery of impairment for goodwill.

Which of the following costs would not be included in the cost of a patent?

Research costs related to product development.

Which of the following does not fall into one of the major categories of intangibles?

Start-up costs.

Which of the following is not a characteristic of intangible assets?

They are all subject to amortization.

characteristics of intangible assets:

They are classified as long-term assets. They lack physical existence. They are not financial instruments.

When do companies adjust the carrying value of their goodwill account?

When it is impaired.

For indefinite-life intangibles other than goodwill, an impairment test should be conducted at least:

annually

IFRS requires that companies assess the estimated residual values and useful lives of intangibles:

at least annually.

The total cost of a trademark or trade name may be expensed rather than_____________.

capitalized

If a company acquires intangibles for stock or in exchange for other assets, the cost of the intangible is the fair value of the ______________ given or the fair value of the_________________ received, whichever is more clearly evident.

consideration; intangible

All of the following expenditures should be expensed as R & D except:

costs of marketing research to promote a new product.

Successful defense of a patent is___________ to the Patents account because the suit establishes the legal rights of the holder of the patent.

debited;

Annual payments made under a franchise agreement should be _________________.

expensed

Goodwill is the excess of cost over:

fair value of the identifiable net assets acquired.

All of the following represent federally granted rights except:

goodwill

All of the following intangible assets have legally established useful lives except:

goodwill.

The cost of a patent should be amortized over its:

legal life or useful life, whichever is shorter.

Limited-life intangibles should be amortized over the __________ of their useful lives or their legal lives.

lesser

Copyrights are valid for:

life of the creator plus 70 years.

Intangible assets are normally classified as:

non-current assets.

Goodwill generated internally should :

not be capitalized in the accounts.

The amount of an impairment loss is equal to the difference between the:

recoverable amount and the carrying value.

An impairment of an intangible asset arises when the asset's carrying amount exceeds the:

recoverable amount.

The impairment test for limited-life intangibles are the ________ as impairment for limited-life tangible assets.

same

Research and development costs:

should be charged to expense when incurred.

The master valuation approach assumes that goodwill includes all of the value that cannot be specifically identified with any of the acquired company's:

tangible and intangible assets.