Chapter 12 Intangible Assets

true or false Under IFRS, costs in the development phase of R & D costs are expensed once technological feasibility is achieved.

false

true or false Intangible assets are normally classified as current assets.

false

true or false Periodic alterations to existing products are considered R&D Costs

false

true or false Routine ongoing efforts to refine an existing product are considered R&D Costs

false

true or false intangible assets are financial instruments

false

The impairment rule for goodwill involves how many steps?

2

construction permits are what type of intangible asset

contract-related intangible assets

The cost of a purchased intangible asset includes what 3 things

incidental expenses. legal fees. purchase price.

Customer-related intangible assets result from interactions with...

outside parties

a brand name is what type of intangible asset

marketing intangible asset

can Costs of developing goodwill internally be amortized

no

can Costs of goodwill from a business combination accounted for as a purchase be amortized

no

do you amortize indefinite life assets

no

can a trademark be amortized

no, it has an indefinite life acquisition costs/legal fees can be capitalized

Which of the following is an example of a marketing-related intangible asset? Broadcast rights. Customer list. Goodwill. Noncompetition agreements.

noncompetion agreements

what is an example of a marketing-related intangible asset?

noncompetition agreement

The two principal types of patents issued by the U.S. Patent and Trademark Office are...

process and product

true or false IFRS allows reversal of impairment losses when there has been a change in economic conditions.

true

true or false IFRS permits revaluation on limited-life intangible assets.

true

true or false IFRS permits some capitalization of internally generated intangible assets.

true

true or false Expensing all R&D costs associated with internally created intangible assets results in Understating assets and overstating expenses.

true

true or false Operation of pilot plants are considered R&D Costs

true

true or false The presentation of intangible assets in the financial statements: Involves crediting amortization directly to the intangible asset account.

true

true or false The presentation of intangible assets in the financial statements: Includes reporting R & D costs as an expense in the income statement.

true

true or false The presentation of intangible assets in the financial statements: Includes the disclosure of the amortization expense for the next 5 years.

true

true or false Current standards only allow companies to capitalize direct costs incurred in developing the intangible, such as legal costs.

true All other costs incurred in developing the intangible are expensed.

what research and development costs may be capitalized?

Research and development equipment to be used on current and future projects

St. Sebastian Company and A. Jamison Company were combined in a purchase transaction. St. Sebastian was able to acquire Jamison at a bargain price. The fair market value of Jamison's net assets exceeded the price paid by St. Sebastian to acquire the company. Proper accounting treatment by St. Sebastian is to report the excess fair value over purchase price as

a gain

When the purchaser in a business combination pays less than the fair value of the identifiable net assets, what is recorded by the purchaser.

a gain

The difference between the price paid to acquire another company and the fair market value of that company's net assets can be referred to as what 3 terms

a master valuation account. goodwill. a gap filler.

Which of the following is a factor to be considered in determining a limited-life intangible asset's useful life? The expected useful life of any related asset. The effects of obsolescence. Any legal provisions that may limit the useful life. All of these answer choices are correct.

all are correct

Which of the following is not a characteristic of intangible assets? They are classified as long-term assets. They lack physical existence. They are not financial instruments. All answer choices are characteristics of intangible assets.

all are correct

true or false Impairment testing is performed in the same way for indefinite-life intangibles and limited-life intangibles.

false For indefinite-life intangibles, a company performs only the fair value test; there is no recoverability test related to indefinite-life intangibles.

true or false 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 A purchased indefinite-life intangible asset is not amortized and is impairment tested annually using the fair value test only.

Which of the following is not one of the major categories of intangibles? Financing-related. Artistic-related. Marketing-related. Contract-related.

financing related

what is the principles that best describes the current method of accounting for research and development costs?

immediate recognition as an expense

patents, copyrights, franchises or licenses, trademarks or trade names and goodwill are examples of

intangible assets

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

is; the recoverability test and then the fair value test.

what are some characteristics of intangible assets

lack physical exsistence they are not financial instruments they are long term in nature

Marketing-related, Customer-related, Artistic-related, Contract-related, Technology-related and Goodwill are what

the 6 types of intangible assets

Which of the following is not a characteristic of intangible assets? They are all subject to amortization. They lack physical existence. They are not financial instruments. They are long-term in nature.

they are all subject to amortization

what is an example of a marketing related intangible assets

trademark