Intangibles WileyPlus

The excess cost of the purchase over the fair market value of a company's identifiable net assets is sometimes referred to as 1. Goodwill 2. A gap filler 3. A master valuation account 4. All of these are correct

All of these are correct

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 1. A brand name 2. A patent 3. A customer list 3. All of these choices are correct

All of these choices are correct

Which of the following represents a federally granted right 1. Franchise 2. Copyrights 3. Internet domain names 4. Goodwill

Copyrights

Which of the following intangible assets cannot be sold by a business to raise needed cash for a capital project 1. Patent 2. Copyright 3. Goodwill 4. Brand name

Goodwill

Which of the following intangible assets should be shown as a separate item on the balance sheet 1. Goodwill 2. Franchise 3. Patent 4. Trademark

Goodwill

Should costs of goodwill from a business combination or costs of developing goodwill internally be amortized over their estimated useful lives

Neither

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

Perform a qualitative assessment to determine if it is more likely than not that the fair value of the reporting unit is less than its carrying value

Which of the following costs incurred internally to create an intangible asset is generally expensed 1. R&D costs 2. Filing costs 3. Legal costs 4. All of these are correct

R&D costs

Which of the following does not describe intangible assets 1. They lack physical evidence 2. They are financial instruments 3. They provide long-term benefits 4. They are classified as long-term assets

They are financial instruments

Which of the following should be reported under the "Other Expenses and Losses" section of the income statement 1. Goodwill impairment losses 2. Trade name amortization expense 3. Patent impairment losses 4. Loss on sale of patent

Trade name amortization expense

Costs incurred internally to create intangibles are expensed

as incurred

When the purchaser in a business combination pays less then the fair value of the identifiable net assets, such a situation is referred to as a

bargain purchase

Capitalizing goodwill only when it is purchased in an arm's-length transaction, and not capitalizing any goodwill generated internally, is an example of

faithful representation winning out over relevance

Grayson Co. incurred significant costs in defending its patent rights. Litigation costs would be capitalized

if the patents right is successfully defended

Companies should test indefinite life intangible assets at least annually for

impairment

A purchased limited-life intangible asset ___ amortized and is impairment tested using ___

is; the recoverability test and then the fair value test

After an impairment loss is recognized, the adjusted carrying amount of the intangible asset shall be its new accounting basis. Which of the following statements about subsequent reversal of a previously recognized impairment loss is correct 1. It must be disclosed in the notes to the financial statements 2. It is prohibited 3. It is required when the reversal is considered permanent 4. It is encouraged, but not required

it is prohibited

The carrying value of an intangible asset is the asset's acquisition cost

less the total related amortization recorded to date

Under current accounting practice, intangible assets are classified as

limited-life or indefinite-life

Goodwill may be recorded when

one company acquires another in a business combination

The cost of successfully defending a patent suit should be amortized

over the remaining estimated useful life of the patent

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

Which of the following intangible assets should not be amortized 1. Copyrights 2. Customer lists 3. Perpetual franchises 4. All of these should be amortized

perpetual franchises

Intangible assets are reported on the balance sheet

separately from other assets

What method of amortization is normally used or intangible assets

straight-line

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