Accounting tb chapter 12-17 multiple choice, with correct answers highlighted in yellow

Chapter 12 TRUE-FALSE—Conceptual 1. Intangible assets derive their value from the right (claim) to receive cash in the future. False 2. Internally generated intangible assets are initially recorded at fair value. Fa ...

Chapter 12 TRUE-FALSE—Conceptual 1. Intangible assets derive their value from the right (claim) to receive cash in the future. False 2. Internally generated intangible assets are initially recorded at fair value. False 3. Limited-life intangibles are amortized by systematic charges to expense over their useful life. True 4. Amortization of limited-life intangible assets should not be affected by expected residual values. False 5. Some intangible assets are not required to be amortized every year. True 6. If a company develops a trademark, it should expense the costs related to attorney fees, registration fees, and design costs. False 7. The cost of acquiring a customer list from another company is recorded as an intangible asset. True 8. The cost of purchased patents should be amortized over the remaining legal life of the patent. False 9. If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent may be amortized over the life of the new patent. True 10. In a business combination, a company assigns the cost, where possible, to the identifiable tangible and intangible assets, with the remainder recorded as goodwill. True 11. Goodwill is considered a master valuation accounts because it measure the value of specifically identifiable intangible assets. False 12. Internally generated goodwill should not be capitalized in the accounts. True 13. Internally generated goodwill associated with a business may be recorded as an asset when a firm offer to purchase that business unit has been received. False 14. All intangibles are subject to periodic consideration of impairment with corresponding potential write-downs. True 15. If the fair value of an unlimited life intangible other than goodwill is less than its book value, an impairment loss must be recognized. True 16. After an impairment loss is recorded for a limited-life intangible asset, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods. True 17. The rules used to account for impairments of limited-life intangible assets are different from the rules used to account for impairments of plant and equipment. False 18. If market value of an impaired asset recovers after an impairment has been recognized, the impairment may be reversed in a subsequent period. False 19. The same recoverability test that is used for impairments of property, plant, and equipment is used for impairments of indefinite-life intangibles. False 20. Periodic alterations to existing products are an example of research and development costs. False 21. Research and development costs that result in patents may be capitalized to the extent of the fair value of the patent. False 22. Research and development costs are recorded as intangible assets if it is felt they will provide economic benefits in future years. False 23. GAAP requires start-up costs and initial operating losses during the early years to be capitalized. True 24. Material, labor, and overhead costs incurred in developing a new product are to be expensed as these are development costs. True 25. Contra accounts must be reported for intangible assets in a manner similar to accumulated depreciation and property, plant, and equipment. False MULTIPLE CHOICE—Conceptual 26. Which of the following does not describe intangible assets? a. They lack physical existence. b. They are financial instruments. c. They provide long-term benefits. d. They are classified as long-term assets. 27. Which of the following characteristics do intangible assets possess? a. Physical existence. b. Claim to a specific amount of cash in the future. c. Long-lived. d. Held for resale. 28. Which characteristic is not possessed by intangible assets? a. Physical existence. b. Long-lived. c. Result in future benefits. d. Expensed over current and/or future years. 29. Costs incurred internally to create intangibles are a. capitalized. b. capitalized if they have an indefinite life. c. expensed as incurred. d. expensed only if they have a limited life. 30. Which of the following costs incurred internally to create an intangible asset is generally expensed? a. Research and development costs. b. Filing costs. c. Legal costs. d. All of these answer choices are correct. 31. Which of the following methods of amortization is normally used for intangible assets? a. Sum-of-the-years'-digits b. Straight-line c. Units of production d. Double-declining-balance 32. The cost of an intangible asset includes all of the following except a. purchase price. b. legal fees. c. other incidental expenses. d. All of these choices are included. 33. Factors considered in determining an intangible asset’s useful life include all of the following except a. the expected use of the asset. b. any legal or contractual provisions that may limit the useful life. c. any provisions for renewal or extension of the asset’s legal life. d. the amortization method used. 34. Under current accounting practice, intangible assets are classified as a. amortizable or unamortizable. b. limited-life or indefinite-life. c. specifically identifiable or goodwill-type. d. legally restricted or goodwill-type. 35. Companies should test indefinite life intangible assets at least annually for a. recoverability. b. amortization. c. impairment. d. estimated useful life. S36. One factor that is not considered in determining the useful life of an intangible asset is a. salvage value. b. provisions for renewal or extension. c. legal life. d. expected actions of competitors. 37. Which intangible assets are amortized? Limited-Life Indefinite-Life a. Yes Yes b. Yes No c. No Yes d. No No 38. The cost of successfully defending a patent suit should be a. charged off in the current period. b. amortized over the legal life of the purchased patent. c. added to factory overhead and allocated to production of the product. d. amortized over the remaining estimated useful life of the patent. 39. Broadway Corporation was granted a patent on a product on January 1, 2004. To protect its patent, the corporation purchased on January 1, 2015 a patent on a competing product which was originally issued on January 10, 2011. Because of its unique plant, Broadway Corporation does not feel the competing patent can be used in producing the product. The cost of the competing patent should be a. amortized over a maximum period of 20 years. b. amortized over a maximum period of 16 years. c. amortized over a maximum period of 9 years. d. expensed in 2015. 40. Wriglee, Inc. went to court this year and successfully defended its patent from infringement by a competitor. The cost of this defense should be charged to a. patents and amortized over the legal life of the patent. b. legal fees and amortized over 5 years or less. c. expenses of the period. d. patents and amortized over the remaining useful life of the patent. 41. Which of the following is not an intangible asset? a. Trade name b. Research and development costs c. Franchise d. Copyrights 42. Which of the following intangible assets should not be amortized? a. Copyrights b. Customer lists c. Perpetual franchises d. All of these intangible assets should be amortized. 43. When a patent is amortized, the credit is usually made to a. the Patents account. b. an Accumulated Amortization account. c. a Deferred Credit account. d. an expense account. 44. When a company develops a trademark the costs directly related to securing it should generally be capitalized. Which of the following costs associated with a trademark would not be capitalized? a. Attorney fees. b. Consulting fees. c. Research and development costs. d. Design costs. 45. Which of the following is a contract-related intangible assts? a. Trademark b. Copyright c. Franchise d. Patent 46. The right granted to all authors, painters, musicians, sculptors, and other artists for their creations and expressions is termed as a a. copyright b. trademark c. patent d. franchise 47. Which of the following types of intangible assets result from interactions and relationships with outside parties? a. Marketing-related intangible assets b. Customer-related intangible assets c. Contract-related intangible assets d. Artistic-related intangible assets 48. Which of the following is a type of technology-related intangible asset? a. Copyright b. Franchise c. License d. Patent 49. Trademarks, newspaper mastheads, and internet domain names are all examples of a. contract-related intangible assets b. artistic-related intangible assets c. marketing-related intangible assets d. customer-related intangible assets 50. John Thomas has recently entered into an agreement with Longman Inc. Under this agreement, John will sell its products using the trade name of Longman in a specified geographical location. What type of intangible asset is this agreement between John Thomas and Longman Inc.? a. contract-related intangible assets b. artistic-related intangible assets c. marketing-related intangible assets d. customer-related intangible assets 51. In a business combination, companies record identifiable intangible assets that they can reliably measure. All other intangible assets, too difficult to identify or measure, are recorded as a. other assets. b. indirect costs. c. goodwill. d. direct costs. 52. Goodwill may be recorded when a. it is identified within a company. b. one company acquires another in a business combination. c. the fair value of a company’s assets exceeds their cost. d. a company has exceptional customer relations. 53. When a new company is acquired, which of these intangible assets, unrecorded on the acquired company’s books, might be recorded in addition to goodwill? a. A brand name. b. A patent. c. A customer list. d. All of these answer choices are correct.