Exam 12: Intangibles

For intangible assets that are amortized what does a company need to disclose on its balance sheet regarding those assets?

The Family company was expanding as a result they engaged in the following activities beginning in 2016. a. Paid $30,000 to the Major League Ballpark to have the Family name displayed on the billboard for three years. b. Purchased a franchise for $20,000 to operate trolley services around the city for tourists. The trolley service is expected to be decommissioned in 4 years due to the maintenance costs, there is hope that it will remain in service. c. Purchased a patent for $45,000 the patent was originally filed in 2011. d. The owner of the patent was a well known inventor and author who sold Family the rights to his novel in exchange for 5,000 shares of stock. The stock has a $5 par value and is currently selling for $25 per share. The novel is expected to sell 1,000,000 copies in the next 2 years. Required: Prepare the journal entries to record the amortization of the intangible assets for 2016. Amortize over their legal life unless otherwise noted.

What are the two methods that a company can amortize software developments costs and which one is more likely to be used?

Trademarks or trade names

The determination of impairment losses differs under IFRS versus GAAP in that

If intangible assets are acquired during the period, what does GAAP require company's to disclose?

An intangible asset with an indefinite life is not amortized but is periodically reviewed for impairment.

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

Which of the following is not a required disclosure regarding intangible assets in the period a company acquires intangible assets?

Which of the following statements regarding goodwill is false?

All of the following items are expensed as start-up costs except

Early in the current year, Nathan Company entered into the following cash transactions: a. Registered a patent. Research and development costs for the patent was $75,000. Legal fees incurred in registration were $7,500. b. Purchased a franchise with an unlimited life with payment of a $35,000 initial franchise fee and a $5,000 operating fee. c. Purchased laboratory equipment costing $175,000. The equipment, with an estimated life of ten years and no residual value, will be used in a variety of research projects. d. Purchased a patent from Asteroid Company at a cost of $40,000. The patent is believed to have an estimated useful life of ten years. e. Registered a trademark that was developed by Nathan's advertising department at a cost of $11,000. Registration fees were $500, and the legal fees incurred were $1,500. The trademark is expected to last indefinitely. Required: Prepare journal entries to record each transaction, including appropriate amortization for the year. Unless a better alternative is indicated, amortize the intangibles over their legal lives.

During 2016, Frank Company incurred $200,000 in legal fees in defending a patent with a carrying value of $3,500,000 against an infringement. Farver's lawyers were successful with the defense of the patent. The legal fees should be

_______occurs when the fair value of an asset is less than its carrying value.

The cost of an internally developed unidentifiable intangible is expensed as incurred. Accordingly, which one of the following costs would be expensed in the year it was incurred?

The costs associated with purchased goodwill are capitalized and amortized over a period not to exceed 20 years.

On January 1, 2016, Sally, Inc. bought a patent for $100,000. There were ten years left of the patent's legal life. On July 1, 2018, the company successfully defended the patent in court at a cost of $30,000. Required: Compute the amount of patent amortization expense for 2018. Assume Sally calculates amortization to the nearest month and uses the straight-line method.

Negative goodwill is recognized as the difference between the fair value of the net assets of an acquired company and the lower bargain purchase price.

Unidentifiable intangible assets are intangible assets that can be separated from the company and sold, transferred, licensed, rented, or exchanged.

In 1975, Riveria Company had acquired copyrights for $750,000 on several literary works from some obscure 18th century authors. These copyrights were fully amortized by 2015. In early 2015, a new anthropological discovery made these copyrights worth $2,500,000. As a result, Riveria should report which of the following in its financial statements for 2015?