Question 1

Which of the following costs should always be expensed as incurred?

Accepted Answer

A)  the costs of externally acquired identifiable intangible assets 
B)  the costs incurred directly associated with establishing and successfully defending the rights associated with internally developed identifiable intangible assets 
C)  the costs of internally developed unidentifiable intangible assets 
D)  the costs of externally acquired unidentifiable intangible assets 
A)  the costs of externally acquired identifiable intangible assets 
B)  the costs incurred directly associated with establishing and successfully defending the rights associated with internally developed identifiable intangible assets 
C)  the costs of internally developed unidentifiable intangible assets 
D)  the costs of externally acquired unidentifiable intangible assets

Question 2

Which of the following statements regarding goodwill is false?

Accepted Answer

A)  Goodwill is never amortized for financial reporting purposes. 
B)  A company must review its goodwill for impairment annually. 
C)  A company must review its goodwill for impairment whenever events or changes in circumstances occur that would more likely than not reduce the fair value below its carrying value. 
D)  A company records goodwill at the time that it acquires another company or at the time it determines that material intellectual capital exists in its employees. 
A)  Goodwill is never amortized for financial reporting purposes. 
B)  A company must review its goodwill for impairment annually. 
C)  A company must review its goodwill for impairment whenever events or changes in circumstances occur that would more likely than not reduce the fair value below its carrying value. 
D)  A company records goodwill at the time that it acquires another company or at the time it determines that material intellectual capital exists in its employees.

Question 3

During 2014, Quartz, Inc. developed a new financial accounting software package for sale. The company spent $15,000,000 on the system, 30% of which was incurred prior to technological feasibility being established. The package was put on sale January 1, 2015, and the company estimates that over the five-year life of the package it will generate $100 million in sales. During 2015, sales amounted to $30 million.
Required:
a.Prepare the journal entry to record the development costs incurred in 2014.
b.Compute the amortization expense of the capitalized software costs for 2015.

Accepted Answer

The answer of During 2014, Quartz, Inc. developed a new...

Question 4

Which of the following is a factor to ber considered when estimating the useful life of an intangible asset

Accepted Answer

A)  the expected life of the asset 
B)  the expected life of another asset that is related to the life of the intangible asset 
C)  any legal provisions that enable the extension of the asset's legal life without substantial economic cost 
D)  all of the above 
A)  the expected life of the asset 
B)  the expected life of another asset that is related to the life of the intangible asset 
C)  any legal provisions that enable the extension of the asset's legal life without substantial economic cost 
D)  all of the above

Question 5

The Arnett Corporation is contemplating building a research and development facility and performing R&D activities in the area of robotics. The president of the company is interested in the accounting required for R&D costs such as materials, facilities, personnel costs, equipment, intangibles purchased from others, and any indirect costs. Arnett's president has asked the company's controller to describe current GAAP requirements with respect to R&D expenditures.
Required: 
a.Based on current GAAP, describe the accounting and reporting requirements for R&D expenditures such as the ones listed above.
b.Describe the rationale that was used by the FASB in its decision to account for R&D costs as prescribed in your answer to requirement a.

Accepted Answer

a.All expenditures incurred for R&D acti

Question 6

The Clementine Company agreed to purchase the Orange Company for $650,000. At the date of purchase, Orange had current assets with a fair market value of $400,000, noncurrent assets (including no marketable securities) with a fair market value of $700,000, and liabilities of $500,000. In accounting for this transaction, Clementine should

Accepted Answer

A)  record noncurrent assets at $650,000 
B)  record a debit of $50,000 as a loss on the purchase 
C)  record goodwill of $50,000 to be reviewed annually for impairment 
D)  record current assets at $550,000 
A)  record noncurrent assets at $650,000 
B)  record a debit of $50,000 as a loss on the purchase 
C)  record goodwill of $50,000 to be reviewed annually for impairment 
D)  record current assets at $550,000

Question 7

An inconsistency in accounting theory can occur because

Accepted Answer

A)  internally developed goodwill is expensed, while purchased goodwill is capitalized 
B)  both internally developed goodwill and purchased goodwill are expensed 
C)  internally developed goodwill is capitalized, while purchased goodwill is expensed 
D)  both internally developed goodwill and purchased goodwill are capitalized 
A)  internally developed goodwill is expensed, while purchased goodwill is capitalized 
B)  both internally developed goodwill and purchased goodwill are expensed 
C)  internally developed goodwill is capitalized, while purchased goodwill is expensed 
D)  both internally developed goodwill and purchased goodwill are capitalized

Question 8

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

Accepted Answer

1) engineering follow-through in an earl

Question 9

GAAP requires companies to disclose any costs of research and development acquired and written off as well as where the information can be found on the income statement.

Accepted Answer

A) True 
 B)False

Question 10

Melissa Company, which was organized in January 2014, 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, 2014, to reclassify the items from the intangible assets account to the appropriate accounts.
b.Prepare the adjusting entry or entries required to amortize any intangible assets recorded or remaining from requirement 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.

Accepted Answer

The answer of Melissa Company, which was organized in January...

Question 11

A patent is amortized over its expected useful life or 20 years. The expected useful life can be impacted by all of the following except

Accepted Answer

A)  a unsuccessful lawsuit against a competitor 
B)  the federal government renewing the original patent 
C)  technical innovations by a competitor 
D)  product improvements by the patent holder 
A)  a unsuccessful lawsuit against a competitor 
B)  the federal government renewing the original patent 
C)  technical innovations by a competitor 
D)  product improvements by the patent holder

Question 12

Purchased intangible assets are generally expensed at their acquisition costs because the future economic benefits associate with them are difficult to measure.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is false regarding the accounting for the cost of intangibles per GAAP?

Accepted Answer

A)  I 
B)  II 
C)  III 
D)  IV 
A)  I 
B)  II 
C)  III 
D)  IV

Question 14

The Wagner Company made the following expenditures for research and development early in 2014: $80,000 for materials, $100,000 for contract services, $80,000 for employee salaries, and $800,000 for a building with an expected life of 20 years to be used for current and future research projects. Wagner uses straight-line depreciation. The company allocated $20,000 in overhead to research and development. What is Wagners' research and development expense for 2014?

Accepted Answer

A)  $200,000 
B)  $220,000 
C)  $320,000 
D)  $700,000 
A)  $200,000 
B)  $220,000 
C)  $320,000 
D)  $700,000

Question 15

Which of the following is not a required disclosure regarding goodwill for each period a company presents a balance sheet?

Accepted Answer

A)  the amount of goodwill acquired 
B)  the amount of goodwill sold 
C)  the amount of any impairment loss recognized 
D)  the amount of any goodwill included in the disposal of a reporting unit 
A)  the amount of goodwill acquired 
B)  the amount of goodwill sold 
C)  the amount of any impairment loss recognized 
D)  the amount of any goodwill included in the disposal of a reporting unit

Question 16

During the period from 2013 to the end of 2014, Excellence, Inc. spent $90,000 on research and development for an invention that was patented on January 1, 2015. Excellence estimated that the patented invention would be useful in its production for 10 years. At the beginning of 2017, Excellence paid $16,000 in legal fees in a successful defense of the patent. What is Excellence's patent amortization expense for 2017?

Accepted Answer

A)  $25,000 
B)  $11,000 
C)  $10,600 
D)  $ 2,000 
A)  $25,000 
B)  $11,000 
C)  $10,600 
D)  $ 2,000

Question 17

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

Accepted Answer

A)  declining balance 
B)  straight line 
C)  annual review for impairment 
D)  none of these since intangible assets are not amortized 
A)  declining balance 
B)  straight line 
C)  annual review for impairment 
D)  none of these since intangible assets are not amortized

Question 18

If a research and development cost has alternative future uses, then the company

Accepted Answer

A)  expenses the cost in the period incurred 
B)  follows normal accrual procedures 
C)  adds the cost to inventory 
D)  adds the cost to property, plant, and equipment 
A)  expenses the cost in the period incurred 
B)  follows normal accrual procedures 
C)  adds the cost to inventory 
D)  adds the cost to property, plant, and equipment

Question 19

New Co. received a patent on a new type of machine. The legal costs and the patent application costs totaled $180,000. R&D costs incurred to create the machine were $120,000. In the year in which the company received the patent, $25,000 was spent in the successful defense of a patent infringement suit.
Required:
At what amount should the patent be capitalized?

Accepted Answer

$180,000 +

Question 20

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

Accepted Answer

The two methods are the percen

Which of the following costs should always be expensed as incurred?

Which of the following statements regarding goodwill is false?

Which of the following is a factor to ber considered when estimating the useful life of an intangible asset

An inconsistency in accounting theory can occur because

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

GAAP requires companies to disclose any costs of research and development acquired and written off as well as where the information can be found on the income statement.

A patent is amortized over its expected useful life or 20 years. The expected useful life can be impacted by all of the following except

Purchased intangible assets are generally expensed at their acquisition costs because the future economic benefits associate with them are difficult to measure.

Which of the following is false regarding the accounting for the cost of intangibles per GAAP?

Which of the following is not a required disclosure regarding goodwill for each period a company presents a balance sheet?

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

If a research and development cost has alternative future uses, then the company

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

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters

Exam 12: Intangibles

Which of the following costs should always be expensed as incurred?

Which of the following statements regarding goodwill is false?

Which of the following is a factor to ber considered when estimating the useful life of an intangible asset

An inconsistency in accounting theory can occur because

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

GAAP requires companies to disclose any costs of research and development acquired and written off as well as where the information can be found on the income statement.

A patent is amortized over its expected useful life or 20 years. The expected useful life can be impacted by all of the following except

Purchased intangible assets are generally expensed at their acquisition costs because the future economic benefits associate with them are difficult to measure.

Which of the following is false regarding the accounting for the cost of intangibles per GAAP?

Which of the following is not a required disclosure regarding goodwill for each period a company presents a balance sheet?

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

If a research and development cost has alternative future uses, then the company

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

The Demand for and Supply of Financial Accounting Information

Financial Reporting: Its Conceptual Framework

Review of a Companys Accounting System

The Balance Sheet and the Statement of Shareholders Equity

The Income Statement and the Statement of Cash Flows

Cash and Receivables

Inventories: Cost Measurement and Flow Assumptions

Inventories: Special Valuation Issues

Current Liabilities and Contingencies

Property, Plant, and Equipment: Acquisition and Subsequent Investments

Depreciation, Depletion, Impairment, and Disposal

Investments and Long-Term Receivables

Financing Liabilities: Bonds and Notes Payable

Contributed Capital

Retained Earnings and Earnings Per Share

Advanced Issues in Revenue Recognition

Accounting for Income Taxes

Accounting for Postretirement Benefits

Accounting for Leases

The Statement of Cash Flows

Accounting for Changes and Errors

Time Value of Money Module

Filters