Acct. ch. 12
Parker Company developed a patent that is currently valued at $100000. The company paid $1000 in legal and filing fees. At what amount, if any does Parker company record the patent on its books? A $100000 B. $1000 C. $0 D. $101000
B. $1000
Intangible and tangible assets have which of the following characteristics in common? A. Held for use in the course of business B. All of the choices are correct C. May be expensed by a company over several period D. Have a useful life of more than 1 year.
B. All of the choices are correct
Accounting for the cost of intangible assets involves all of the following except: A. Distinguishing between those that are externally acquired and those that are internally developed. B. Expensing as incurred all costs of internally developed intangible assets C. Reviewing for impairment purchased unidentifiable intangible assets D. Amortizing the cost of purchased intangible assets with a finite life
B. Expensing as incurred all costs of internally developed intangible assests
Internally developed goodwill is expensed as the cost are incurred because: I. Internally developed goodwill is not separable from the other assets of a company. II. Measuring the value of internally developed goodwill would be less representationally faithful than measuring the value of identifiable intangible assets. A. I only B. I and II C. II only D. Neither I nor II
B. I and II
Which of the following assets is amortized over the shorter of its expected useful life or 20 years? I. Trademarks II. Patents A. I and II B. II only C. I only D. Neither I nor II
B. II only
Unidentifiable intangible assets: A. Include customer lists and non-compete agreements B. Cannot be separated from the entity C. May be transferred or exchanged D. All of the choices are correct
B. cannot be separated from the entity
Under IFRS, development costs A. Are capitalized if purchased from an outside 3rd party B. Are expensed as incurred C. Are capitalized if technical and economic feasibility can be demonstrated. D. Are capitalized once the legal rights to the product or process have been obtained.
C. Are capitalized once the legal rights to the product
In estimating the useful life of an intangible asset, a company uses: I. The level of maintenance costs required to obtain the expected future cash flows from the asset. II. The effect of competition III. Contractual provisions the enable renewal or extension of the asset's legal or contractual life without substantial economic cost. A. III only B. II and III only C. I, II, and III D. I and III only
C. I, II, and III
Which of the following elements of R&D activities does a company include in R&D costs? I. Personnel II. Contract services III. Intangible assets purchased from others A. II and III only B. I and II only C. I, II, and III D. I and III only
C. I, II, and III
Which of the following assets typically are amortized? A. Patents: No, Trademarks: Yes B. Patents: Yes, Trademarks: Yes C. Patents: Yes, Trademarks: No D. Patents: No, Trademarks: No
C. Patents: Yes, Trademarks: No
Goodwill represents the excess of the purchase price of an acquired company over the: A. Book value of an acquired company B. Sum of the fair values assigned to intangible assets acquired minus liabilities asumed. C. Sum of the fair value assigned to identifiable assets acquired minus liablilities assumed D. Sum of the fair values assigned to tangible assets acquired minus liabilities assumed.
C. Sum of the fair values assigned to identifiable assets acquired minus liabilities assumed.
What is the proper time or time period over which to amortize and intangible asset if there is no forseeable limit on the period of time over which the intangible assets is expected to be used in operations? A. 40 years B. 50 years C. not amortized D. immediately
C. not amortized
Sherwood corp. incurred $68000 of R&D costs in its laboratory to develop a patent that was granted on Jan. 2, 2016. Legal fees and other costs associated with registration of the patent totaled $13600. Sherwood estimates that the economic life of the patent will be 8 years. What amount should Sherwood charge to patent amortization expense for the year ended Dec. 31, 2016 A. $0 B. $10200 C. $800 D. $1700
D. $1700
Which of the following factors cause the market value of a company to be greater than the book value of the company? A. Many assets are listed on the balance sheet at amounts different from their fair market value. B. Goodwill may exist but not be recognized C. The acquirer paid too much. D. All of the choices are correct.
D. All of the choices are correct.
A purchased patent has a remaining legal life of 15 years. It should be: A. Expensed in the year of acquisition B. Not Amortized C. Amortized over 15 years regardless of its useful life D. Amortized over its useful life if less than 15 years.
D. Amortized over its useful life if less than 15 years.
Which of the following activities are excluded from R&D? I. Design of tools, jigs, molds, and dies involving new technology II. Quality control and testin during commercial production. III. Design, construction, and testing of preproduction prototypes and models A. I only B. I and III only C. II and III only D. II only
D. II only
When is goodwill amortized? A. Whenever events or changes in circumstances occur that would indicate an impairment may exist. B. When a company assesses qualitative factors and determines that it is more likely than not that the fair value of the reporting unit is less than its carrying value. C. When a company assesses qualitative factors and determines that the fair value of the reporting unit is more likely than not greater than its carrying value. D. Never
D. Never
Which of the following amounts incurred in connection with a trademark should be capitalized? A. Cost of a Successful Defense: Yes, Registration fee: No B. Cost of a successful defense: No, Registration fee: Yes C. Cost of a successful defense: No, Registration fee: No D. Cost of a successful defense: Yes, Registration fee: Yes
D. cost of a successful defense: yes, Registration fee: Yes
During 2012, Traco Machine Comp. spent $176000 on R&D costs for an invention. This invention was patented on Jan. 2, 2013, at a nominal cost that was expensed in 2013. The patent had a legal life of 20 years and an estimated useful life of 8 years. In Jan. 2017, Traco paid $16000 for legal fees in a successful defense of the patent. Amortization for 2017 should be: A. $1000 B. $0 C. $4000 D. $26000
c. $4000
