311 chapter 12
Which of the following is not a characteristic of intangible assets?
All answer choices are characteristics of intangible assets.
Which of the following represents a federally granted right?
Copyrights.
Which of the following is a research and development cost?
Development or improvement of techniques and processes
A purchased indefinite-life intangible asset is not amortized and is impairment tested annually using the recoverability test followed by the fair value test.
False
An indefinite-life intangible asset is amortized over the shorter of its useful life or its legal life.
False
Impairment testing is performed in the same way for indefinite-life intangibles and limited-life intangibles.
False
There are two steps to impairment testing for goodwill: First the recoverability test is performed, then the fair value test is performed.
False
Which intangible asset should be disclosed separately on the balance sheet?
Goodwill.
Which of the following principles best describes the current method of accounting for research and development costs?
Immediate recognition as an expense
Which of the following statements concerning intangible assets is correct?
Intangible assets derive their value from the rights and privileges granted to the company using them.
Which of the following characteristics do intangible assets possess?
Long-lived.
Which of the following is an example of a marketing-related intangible asset?
Noncompetition agreements.
Which of the following costs incurred by Berber Corporation are considered Research & Development (R&D) costs?
Operation of pilot plants.
Which of the following costs incurred internally to create an intangible asset is generally expensed?
Research and development costs.
Which of the following methods of amortization is normally used for intangible assets?
Straight-line
Which of the following would not be amortized?
Trade name.
Marketing-related intangibles would include
a trade name.
The cost of an intangible asset includes all of the following except
all of these choices are included.
For indefinite-life intangibles other than goodwill, an impairment test should be conducted at least:
annually.
Costs incurred internally to create intangibles are
expensed as incurred.
In a business combination, companies record identifiable intangible assets that they can reliably measure. All other intangible assets, too difficult to identify or measure, are recorded as
goodwill.
Goodwill
is the difference between the fair value of the net tangible and identifiable intangible assets and the purchase price of the acquired business.
A purchased limited-life intangible asset ______ amortized and is impairment tested using _______________.
is; the recoverability test and then the fair value test
One factor that is not considered in determining the useful life of an intangible asset is
salvage value.
The controversy surrounding the policy to expense all research and development costs associated with internally created intangible assets results in
understating assets and overstating expenses.
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?
All of these answer choices are correct.
Which of the following is a factor to be considered in determining a limited-life intangible asset's useful life?
All of these answer choices are correct.
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 whether fair value of the reporting unit is less than the carrying amount and report an impairment loss on goodwill in the income statement.
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 capitalized if the patent right is successfully defended.
On January 1, 2005, Jambon purchased equipment for use in developing a new product. Jambon uses the straight-line depreciation method. The equipment could provide benefits over a 10-year period. However, the new product development is expected to take 5 years, and the equipment can be used only for this project.Jambon's 2005 expense equals
The total cost of the equipment.
The presentation of intangible assets in the financial statements
all of these answer choices are correct.
Under GAAP, impairment losses
cannot be reversed for assets to be held and used.
The cost of successfully defending a patent suit should be
capitalized and amortized over the remaining estimated useful life of the patent.
The intangible asset goodwill may be
capitalized only when purchased.
A loss on impairment of an intangible asset is the difference between the asset's
carrying amount and its fair value.
Companies should test indefinite life intangible assets at least annually for
impairment.
Under current accounting practice, intangible assets are classified as
limited-life or indefinite-life.
Purchased goodwill should
not be amortized.
Goodwill may be recorded when
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 remaining useful life of the patent.
The carrying amount of an intangible is
the asset's acquisition cost less the total related amortization recorded to date.
For a public business entity, the goodwill impairment test is required to be performed
Any time during the fiscal year, provided that it is performed at the same time every year.
The recoverability test is used to determine any impairment loss on which of the following types of intangible assets?
Limited life intangibles.
Which of the following is not a characteristic of intangible assets?
They are all subject to amortization.
Which of the following is a characteristic of intangible assets?
They are long-term in nature.
Which of the following does not describe intangible assets?
They provide long-term benefits.
If the life of a limited-life intangible asset changes, the remaining carrying amount is amortized over the revised remaining useful life.
True
In accounting for internally generated intangible assets, GAAP requires that
all costs be expensed.
The cost of a purchased intangible asset includes
all of these answer choices are correct.
Intangible assets are normally classified as current assets.
False
Sloan Corporation is performing its annual test of the impairment of goodwill for its Financing reporting unit. It has determined that the fair value of the unit exceeds it carrying value. Which of the following is correct concerning this test of impairmen
Impairment is not indicated and no additional analysis is necessary.
Which of the following intangible assets should not be amortized?
Perpetual franchises
Which characteristic is not possessed by intangible assets?
Physical existence.
Which of the following is not an intangible asset?
Research and development costs