Exam 12: Intangibles

During 2016, Debbie Company incurred $240,000 in legal fees in defending a patent with a carrying value of $4,500,000 against an infringement. Debbie's lawyers were not successful with the defense of the patent. The legal fees should be

List 3 activities that can be included in R&D.

What are the five basic categories that identifiable intangible assets can be classified?

Which of the following accounting principles or conventions is contradictory to the GAAP requirement to expense R&D costs immediately?

Which of the following sets describes the appropriate accounting for intangible assets with a finite life?

The amortization period for a patent is

Which of the following is not required to be disclosed in an entity's financial statements or accompanying footnotes?

Software development costs are treated as R&D expense until technological feasibility of the product is established.

The costs associated with internally developed goodwill are capitalized.

In January 2014, the Jennifer Corporation purchased a patent for $231,000 from Travis Company that had a remaining legal life of 14 years. Jennifer estimated that the remaining economic life would be seven years. In January 2018, the company incurred $30,000 in legal costs to defend the patent from an infringement. Jennifer's lawyers were successful, and the remaining years of benefit from the patent were estimated to be six years. What is the patent amortization expense for 2018?

Which of the following statements regarding intangible assets is true?

Impairment losses may be reversed under

Melissa Company, which was organized in January 2016, recorded the following transactions during 2014 in a single account called Intangible Assets: Note: The president of Melissa has stated that she believes the employee training costs have resulted in goodwill. Required: a. Prepare an entry as of December 31, 2016, to reclassify the items from the intangible assets account to the appropriate accounts. a. Patents are estimated to have a ten-year economic life. Any other intangible assets recognized should be amortized over their legal life. Record amortization to the nearest month, using the straight-line method. b. Prepare the adjusting entry or entries required to amortize any intangible assets recorded or remaining from requirement

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

Pleasantville Company had the following balance sheet on January 1. On January 2, Carrs Company came to an agreement to purchase Pleasantville by acquiring all of its outstanding shares for $575,000 in cash. On that date in time, the fair value of their inventory was $150,000, and the fair value of the equipment was $225,000. The book value is accurate as of January1, and was equal to fair value. Required: 1.) Compute the goodwill associated with the purchase of Pleasantville. 2.) Prepare the journal entry necessary at January 1, to record the acquisition of Pleasantville.

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

Debbie acquired a franchise to operate a donut shop from Dollar Donuts, Inc., for $100,000. She incurred an additional $4,000 in legal costs to negotiate the terms with the franchiser. 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. What is the franchise cost that should be capitalized?

Provide two examples that would indicate goodwill is impaired.

Goodwill is tested for impairment only within the context of its reporting unit.

GAAP requires that a company expense all of its research and development costs as they are incurred.