Exam 12: Intangibles

Which of the following methods is commonly used to amortize intangible assets over their useful lives?

List 5 activities that would be excluded from R & D.

What factors should a company consider when estimating the useful life of an intangible asset?

Purchased identifiable intangible assets are accounted for in a similar manner to that of tangible assets..

In 2014, Xenex Market Services began development of a customer management software package for their own internal use and incurred $40,000 costs related to conceptual formulation of design alternatives. In 2015, management agreed to fully fund development of the software and spent $120,000 in development costs. In 2016, development was completed after incurring an additional $160,000 in development costs plus another $ 60,000 was spent on training costs for using the software. In 2017, the company started using the software and began amortizing related costs over a 10-year expected useful life. What is the amount of amortization expense for 2017 for this internally-developed software?

Costs for which of the following activities should not be included in research and development R&D)?

In March of 2016, Marian Corp. applied for a trade name. Legal costs associated with the application were $25,000. At the time of filing the application, the company projected extra annual income to be generated through having the trade name to be $100,000. On Feb. 5, 2018, the company incurred $20,000 in an unsuccessful defense of the trade name. Required: a. What is the amount of income or expense associated with the trade name for the year 2016? For the year 2017? For the year 2018? b. What is the accounting rationale for the amounts recorded in each year?

The allocation of the cost of intangible assets in a systematic manner over the asset's useful life is called

Costs for which of the following activities would not be included as part of research and development R&D) costs?

R Company registered a patent on January 1, 2015. P Company purchased the patent from R Company for $450,000 on January 1, 2020, and began to amortize the patent over its remaining legal life. In early 2021, P Company determined that the patent's economic benefits would last only until the end of 2025. What amount should P Company record for patent amortization in 2021?

Legal work in connection with patent applications or litigation, and the sale or licensing of patents is excluded from R & D.

Ship Publishing signed a contract with an artist to publish his artwork into large format posters to resell. The contract was signed on January 1, 2014, and a payment of $15,000 was made to obtain copyright privileges. Ship sold 15,000 posters each year starting in 2014 at a price of $15. The copyright is expected to be useful for 3 years. Required: Prepare the journal entries for 2014 and 2015.

All of the following characteristics are common to both tangible and intangible noncurrent assets with finite lives except

Provide two examples of internally developed goodwill and what distinguishes them from other identifiable intangible assets?

U.S. GAAP allows a company to capitalize more of the costs of internally generated assets than allowed under IFRS.

On January 1, 2015, Moose Co. purchased for $360,000 a patent that had been granted two years earlier. On January 1, 2017, legal costs of $64,000 were incurred in a successful defense of the patent. Assuming the maximum period allowable is used for patent amortization, what is Moose's patent amortization expense for 2017?

Which of the following characteristics is not common to both tangible and intangible assets?

The following costs were incurred by Mark Corporation during the current year: ∙ Legal fees paid to attorneys in connection with a patent application related to a new invention developed by the company's laboratory personnel: $40,000. ∙ Salaries of personnel involved in searching for applications of new research findings: $150,000. ∙ Cost of machinery acquired on January 1, 2014: $355,000. The machinery will be used in a current research and development project, as well as several other R&D projects over the next eight years, after which the machine is expected to be sold for $15,000. Mark Corporation uses straight-line depreciation. ∙ Costs of design, construction, and testing of preproduction prototypes of potential new product lines for the company: $70,000. ∙ Cost of developing a valuable new product that was successfully patented: $100,000. ∙ Cost of marketing research to promote the new product: $60,000. Required: a. Calculate the total research and development expense that should appear in Mark's current year income statement. b. For any of the above items you exclude from the current year expense amount, indicate the proper accounting treatment.

Which amortization method should be used for intangibles that are amortized?

Which of the following relationships between category of intangibles and amortization is false?