Exam 12: Intangible Assets

Lynne Corporation acquired a patent on May 1, 2014. Lynne paid cash of $45,000 to the seller. Legal fees of $1,000 were paid related to the acquisition. What amount should be debited to the patent account?

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

It has been argued on the grounds of conservatism that all intangible assets should be written off immediately after acquisition. Discuss the accounting arguments against this treatment.

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

Some intangible assets are not required to be amortized every year.

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

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

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

The carrying value of an intangible is

Short essay questions.1. What are intangible assets?2. How are limited-life intangibles accounted for subsequent to acquisition?

If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent may be amortized over the life of the new patent.

Intangible assets derive their value from the right (claim) to receive cash in the future.

Which of the following research and development expenditures should be capitalized and depreciated?

If the fair value of an unlimited life intangible other than goodwill is less than its book value, an impairment loss must be recognized.

Alonzo Co. acquires 3 patents from Shaq Corp. for a total of $270,000. The patents were carried on Shaq's books as follows: Patent AA: $5,000; Patent BB: $2,000; and Patent CC: $3,000. When Alonzo acquired the patents their fair values were: Patent AA: $20,000; Patent BB: $240,000; and Patent CC: $60,000. At what amount should Alonzo record Patent BB?

12-128Snyder Industries had one patent recorded on its books as of January 1, 2015. This patent had a book value of $168,000 and a remaining useful life of 7 years. During 2015, Snyder brought a patent infringement suit against a competitor. On October 1, 2015, Snyder received the goods news that its patent was valid and that its competitor could not use the process Snyder had patented. The company incurred $60,000 to defined this carrying value of the patent. Compute the patent that would be reported on the December 31, 2015, balance sheet, assuming monthly amortization of carrying value of the patents.

Which of the following costs should be capitalized in the year incurred?

In 2015, Edwards Corporation incurred research and development costs as follows: These costs relate to a product that will be marketed in 2016. It is estimated that these costs will be recouped by December 31, 2018. The equipment has no alternative future use. What is the amount of research and development costs that should be expensed in 2015?

Research and development activities may include (a) personnel costs, (b) materials and equipment costs, and (c) indirect costs. What is the recommended accounting treatment for these three types of R&D costs?

John Thomas has recently entered into an agreement with Longman Inc. Under this agreement, John will sell its products using the trade name of Longman in a specified geographical location. What type of intangible asset is this agreement between John Thomas and Longman Inc.?