Chapter 12 Concepts

Internally generated goodwill associated with a business may be recorded as an asset when a firm offer to purchase that business unit has been received.

False

Periodic alterations to existing products are an example of research and development costs.

False

Research and development costs that result in patents may be capitalized to the extent of the fair value of the patent.

False

The rules used to account for impairments of limited-life intangible assets are different from the rules used to account for impairments of plant and equipment.

False

Which of the following is a contract-related intangible assets?

Franchise

Which of the following costs incurred internally to create an intangible asset is generally expensed?

Research and development costs.

One factor that is not considered in determining the useful life of an intangible asset is

salvage value

Which of the following methods of amortization is normally used for intangible assets?

straight-line

Factors considered in determining an intangible asset's useful life include all of the following except

the amortization method used

Which of the following does not describe intangible assets?

they are financial instruments

Internally generated goodwill should not be capitalized in the accounts.

true

The cost of acquiring a customer list from another company is recorded as an intangible asset.

true

GAAP requires start-up costs and initial operating losses during the early years to be capitalized.

False

Amortization of limited-life intangible assets should not be affected by expected residual values.

False

Contra accounts must be reported for intangible assets in a manner similar to accumulated depreciation and property, plant, and equipment.

False

Limited-life intangibles are amortized by systematic charges to expense over their useful lives.

True

If a company develops a trademark, it should expense the costs related to attorney fees, registration fees, and design costs.

false

The cost of an intangible asset includes all of the following except

all of these choices are included

The right granted to all authors, painters, musicians, sculptors, and other artists for their creations and expressions is termed as a

copyright

Costs incurred internally to create intangibles are

expensed as incurred