Question 1

Which of the following costs should always be expensed as incurred?

Accepted Answer

A) the costs of externally acquired identifiable intangible assets 
B) the externally incurred costs directly associated with internally developed identifiable intangible assets 
C) the costs of internally developed unidentifiable intangible assets 
D) the costs of externally acquired unidentifiable intangible assets 
A) the costs of externally acquired identifiable intangible assets 
B) the externally incurred costs directly associated with internally developed identifiable intangible assets 
C) the costs of internally developed unidentifiable intangible assets 
D) the costs of externally acquired unidentifiable intangible assets

Question 2

At the beginning of 2010, Billy Co.purchased Willie Corp.The agreed fair value of Willie's net assets was $900, 000.The expected annual income for Willie was $60, 000.The normal return for the industry was 6%.Excess earnings were capitalized at 10%.How much of a premium (in excess of $900, 000)did Billy pay for Willie?

Accepted Answer

A) $ 600 
B) $ 6, 000 
C) $60, 000 
D) $40, 000 
A) $ 600 
B) $ 6, 000 
C) $60, 000 
D) $40, 000

Question 3

Which of the following research and development costs should always be capitalized?

Accepted Answer

A) costs of intangibles purchased from others 
B) costs of materials, equipment, and intangibles with alternative future uses purchased from others 
C) costs of equipment with an expected life greater than three years 
D) costs of contract services purchased from others 
A) costs of intangibles purchased from others 
B) costs of materials, equipment, and intangibles with alternative future uses purchased from others 
C) costs of equipment with an expected life greater than three years 
D) costs of contract services purchased from others

Question 4

During the period from 2008 to the end of 2009, Innovation, Inc.spent $90, 000 on research and development for an invention that was patented on January 1, 2010.Innovation estimated that the patented invention would be useful in its production for 10 years.At the beginning of 2012, Innovation paid $16, 000 in legal fees in a successful defense of the patent.What is Innovation's patent amortization expense for 2012?

Accepted Answer

A) $25, 000 
B) $11, 000 
C) $10, 600 
D) $ 2, 000 
A) $25, 000 
B) $11, 000 
C) $10, 600 
D) $ 2, 000

Question 5

The Lopez Company was organized at the end of 2010.The following items acquired on January 1, 2011, were listed by the company as intangible assets at the end of 2011:
   At the beginning of 2011, Lopez also purchased a research building at a cost of $275, 000.The company estimates that the building will be used in numerous projects over a 20-year period.During the year, Lopez spent $75, 000 on research and development materials and salaries.In early January 2011, Lopez purchased a patent for $60, 000 that was used exclusively for a single research project conducted during 2011.Lopez uses straight-line amortization over the maximum allowable periods.In addition, on July 1, 2011, Lopez incurred legal fees of $23, 400 to defend the new patent that had been acquired for $60, 000.Lopez's lawyers were successful in the defense of the patent.
Required:
Determine the amortization expense for intangibles for 2011.Lopez calculates amortization expense to the nearest month.

Accepted Answer

Patent amortization:

Question 6

GAAP requires that research and development costs be expensed and that purchased goodwill be capitalized and not be amortized.
Required:
From a conceptual viewpoint, discuss the validity of the different treatments for these two types of expenditures.

Accepted Answer

In dealing with research and development

Question 7

Which of the following is an intangible asset that is not typically amortized?

Accepted Answer

A) patent 
B) copyright 
C) franchise 
D) trademark 
A) patent 
B) copyright 
C) franchise 
D) trademark

Question 8

IFRS and GAAP differ in the application of the fair value concept for impairment tests applied to intangible assets.
Required:
Describe the fair value concept as it is applied for impairment tests in IFRS and GAAP, highlighting the differences.

Accepted Answer

As a measure of fair value, GAAP uses th

Question 9

At the date of purchase, materials, equipment, facilities, and intangibles purchased from others that have alternative future uses in research and development should be

Accepted Answer

A) capitalized 
B) charged directly to retained earnings 
C) included in R&D expense immediately 
D) charged as a loss from continuing operations 
A) capitalized 
B) charged directly to retained earnings 
C) included in R&D expense immediately 
D) charged as a loss from continuing operations

Question 10

When deciding how to account for research and development costs, FASB had to choose between

Accepted Answer

A) predicative value and timeliness 
B) verifiability and neutrality 
C) relevance and reliability 
D) understandability and decision usefulness 
A) predicative value and timeliness 
B) verifiability and neutrality 
C) relevance and reliability 
D) understandability and decision usefulness

Question 11

Which of the following relationships between category of intangibles and amortization is not true? $\begin{array}{lll}
&\text { Category }&\text { Amortize }\
\text { I. } & \text { Intangible assetswith a finite life } & \text { Yes } \
\text { II. } & \text { Intangible assetswith an indefinite life } & \text { No } \
\text { III. } & \text { Goodwill } & \text { Yes } \
\text { IV. } & \text { Internally developed unidentifiable intangibles } & \text { No }
\end{array}$

Accepted Answer

A) I 
B) II 
C) III 
D) IV 
A) I 
B) II 
C) III 
D) IV

Question 12

Which of the following statements concerning internally developed goodwill is true?

Accepted Answer

A) It is a separately identifiable asset. 
B) It is capitalized at its cost. 
C) The costs associated with its development are expensed as incurred. 
D) Measuring its value is relatively easy and reliable. 
A) It is a separately identifiable asset. 
B) It is capitalized at its cost. 
C) The costs associated with its development are expensed as incurred. 
D) Measuring its value is relatively easy and reliable.

Question 13

Consider the following information from a company's records for 2010:
   Required:
 a. Compute the amount of R\&D costs that should be classified as expensesin determining 2010 net income. 
b. For any listed item not included in your answer to requirement 1 , provide the rationale for not expensing it.

Accepted Answer

a.@#LAT-DLM&
b.The costs of the patent i

Question 14

The amortization period for a patent is

Accepted Answer

A) indefinite; patents should be reviewed for impairment annually 
B) 20 years 
C) 20 years or the expected useful life of the patent, whichever is longer 
D) 20 years or the expected useful life of the patent, whichever is shorter 
A) indefinite; patents should be reviewed for impairment annually 
B) 20 years 
C) 20 years or the expected useful life of the patent, whichever is longer 
D) 20 years or the expected useful life of the patent, whichever is shorter

Question 15

Which of the following statements is not true with regard to international accounting standards for research and development costs?

Accepted Answer

A) Some countries require research costs to be expensed and development costs to be capitalized. 
B) Some countries allow the capitalization of R&D costs. 
C) The universal practice with regard to R&D costs is to capitalize the expenditures. 
D) R&D costs are accounted for in different ways in different countries. 
A) Some countries require research costs to be expensed and development costs to be capitalized. 
B) Some countries allow the capitalization of R&D costs. 
C) The universal practice with regard to R&D costs is to capitalize the expenditures. 
D) R&D costs are accounted for in different ways in different countries.

Question 16

At the date of purchase, materials, equipment, facilities, and intangibles purchased from others that have no alternative future uses in research and development or other activities should be

Accepted Answer

A) capitalized 
B) charged directly to retained earnings 
C) included in R&D expense immediately 
D) charged as a loss from continuing operations 
A) capitalized 
B) charged directly to retained earnings 
C) included in R&D expense immediately 
D) charged as a loss from continuing operations

Question 17

Marsha acquired a franchise to operate a beauty salon from Envincta, Inc., for $88, 000.She incurred an additional $4, 000 in legal costs to negotiate the terms with the franchisor.In five years, the franchise contract will be renegotiated.The current contract also states that there will be a $3, 000 annual fee plus a two percent charge based on the store's annual revenue, which is expected to average 90, 000 per year.The franchise cost that should be capitalized is

Accepted Answer

A) $ 88, 000 
B) $ 92, 000 
C) $107, 000 
D) $116, 000 
A) $ 88, 000 
B) $ 92, 000 
C) $107, 000 
D) $116, 000

Question 18

Routine accounting for goodwill under IFRS versus GAAP is

Accepted Answer

A) the same 
B) completely different 
C) different because IFRS amortize goodwill in a systematic way 
D) different because IFRS amortize goodwill in a rational way 
A) the same 
B) completely different 
C) different because IFRS amortize goodwill in a systematic way 
D) different because IFRS amortize goodwill in a rational way

Question 19

On January 1, 2010, Sable, Inc.bought a patent for $100, 000.There were ten years left of the patent's legal life.On July 1, 2012, the company successfully defended the patent in court at a cost of $30, 000.
Required:
Compute the amount of patent amortization expense for 2012.Assume Sable calculates amortization to the nearest month and uses the straight-line method.

Accepted Answer

Patent amortization for 2012 is $12, 000

Question 20

Costs associated with various intangibles of a company may either be expensed when incurred or capitalized and amortized.Such costs might be recorded in any of the following ways:
 a. charged to the patent account and amortized
b. charged to the franchise ac count and amortized
c. charged to other appropriate asset ac counts and amortized or depreciateo
d. charged to expense when incurred
 Required:
Indicate how each of the following costs should be recorded by placing the appropriate letter (a-d)in the space provided.

Accepted Answer

The answer of Costs associated with various intangibles of a...

Which of the following costs should always be expensed as incurred?

Which of the following research and development costs should always be capitalized?

GAAP requires that research and development costs be expensed and that purchased goodwill be capitalized and not be amortized. Required: From a conceptual viewpoint, discuss the validity of the different treatments for these two types of expenditures.

Which of the following is an intangible asset that is not typically amortized?

IFRS and GAAP differ in the application of the fair value concept for impairment tests applied to intangible assets. Required: Describe the fair value concept as it is applied for impairment tests in IFRS and GAAP, highlighting the differences.

At the date of purchase, materials, equipment, facilities, and intangibles purchased from others that have alternative future uses in research and development should be

When deciding how to account for research and development costs, FASB had to choose between

Which of the following relationships between category of intangibles and amortization is not true? Category Amortize I. Intangible assetswith a finite life Yes II. Intangible assetswith an indefinite life No III. Goodwill Yes IV. Internally developed unidentifiable intangibles No

Which of the following statements concerning internally developed goodwill is true?

The amortization period for a patent is

Which of the following statements is not true with regard to international accounting standards for research and development costs?

At the date of purchase, materials, equipment, facilities, and intangibles purchased from others that have no alternative future uses in research and development or other activities should be

Routine accounting for goodwill under IFRS versus GAAP is

The Environment of Financial Reporting

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Changes in Stockholders Equity

The Income Statement and the Statement of Cash Flows

Additional Aspects of Financial Reporting and Financial Analysis

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Disposal

Depreciation and Depletion

Current Liabilities and Contingencies

Long-Term Liabilities and Receivables

Investments

Contributed Capital

Earnings Per Share and Retained Earnings

Income Recognition and Measurement of Net Assets

Accounting for Income Taxes

Accounting for Postemployment Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters

Exam 12: Intangibles

Which of the following costs should always be expensed as incurred?

Which of the following research and development costs should always be capitalized?

GAAP requires that research and development costs be expensed and that purchased goodwill be capitalized and not be amortized. Required: From a conceptual viewpoint, discuss the validity of the different treatments for these two types of expenditures.

Which of the following is an intangible asset that is not typically amortized?

IFRS and GAAP differ in the application of the fair value concept for impairment tests applied to intangible assets. Required: Describe the fair value concept as it is applied for impairment tests in IFRS and GAAP, highlighting the differences.

At the date of purchase, materials, equipment, facilities, and intangibles purchased from others that have alternative future uses in research and development should be

When deciding how to account for research and development costs, FASB had to choose between

Which of the following relationships between category of intangibles and amortization is not true? Category Amortize I. Intangible assetswith a finite life Yes II. Intangible assetswith an indefinite life No III. Goodwill Yes IV. Internally developed unidentifiable intangibles No

Which of the following statements concerning internally developed goodwill is true?

Consider the following information from a company's records for 2010: Required: a. Compute the amount of R\&D costs that should be classified as expensesin determining 2010 net income. b. For any listed item not included in your answer to requirement 1 , provide the rationale for not expensing it.

The amortization period for a patent is

Which of the following statements is not true with regard to international accounting standards for research and development costs?

At the date of purchase, materials, equipment, facilities, and intangibles purchased from others that have no alternative future uses in research and development or other activities should be

Routine accounting for goodwill under IFRS versus GAAP is

The Environment of Financial Reporting

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Changes in Stockholders Equity

The Income Statement and the Statement of Cash Flows

Additional Aspects of Financial Reporting and Financial Analysis

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Property, Plant, and Equipment: Acquisition and Disposal

Depreciation and Depletion

Current Liabilities and Contingencies

Long-Term Liabilities and Receivables

Investments

Contributed Capital

Earnings Per Share and Retained Earnings

Income Recognition and Measurement of Net Assets

Accounting for Income Taxes

Accounting for Postemployment Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters