Exam 12: Intangibles

Consider the following information from a company's records for 2014: Required: Compute the amount of R&D expense for 2014. The company normally uses straight-line depreciation for plant assets.

The Family company was expanding as a result they engaged in the following activities beginning in 2014. 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 2009. 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.

Which of the following groups would be classified as intangible assets for financial accounting and reporting purposes?

Related to in-process R&D, the acquiring company may not

Intangible assets are initially recorded at

Impairment losses may be reversed under

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

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?

Development costs related to computer software that is to be sold, leased, or otherwise marketed should be accounted for in which of the following ways?

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

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

The following items are included in research and development costs EXCEPT

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

Listed below is a series of statements about various costs associated with intangibles. Required: Indicate whether each of these costs should be expensed (E) or capitalized (C) in the space provided.

Which of the following is not a required disclosure regarding intangible assets that are amortized for each period a company presents a balance sheet?

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.

Early in 2014, 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.

Which of the following statements regarding intangible assets is true?

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

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