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Exam 12: Intangible Assets

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Question 31

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The general ledger of Vance Corporation as of December 31, 2015, includes the following accounts: In the preparation of Vance's balance sheet as of December 31, 2015, what should be reported as total intangible assets?

A) $570,000.
B) $597,000.
C) $600,000.
D) $627,000.

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Question 32

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What factors are considered in estimating the useful life of an intangible asset?

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Question 33

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Under current accounting practice, intangible assets are classified as

Which of the following does not describe intangible assets?

Jenks Corporation acquired Linebrink Products on January 1, 2015 for $8,000,000, and recorded goodwill of $1,500,000 as a result of that purchase. At December 31, 2015, Linebrink Products had a fair value of $6,800,000. The net identifiable assets of the Linebrink (excluding goodwill) had a fair value of $5,800,000 at that time. What amount of loss on impairment of goodwill should Jenks record in 2015?

Dotel Company's 12/31/15 balance sheet reports assets of $9,000,000 and liabilities of $3,750,000. All of Dotel's assets' book values approximate their fair value, except for land, which has a fair value that is $600,000 greater than its book value. On 12/31/15, Egbert Corporation paid $9,150,000 to acquire Dotel. What amount of goodwill should Egbert record as a result of this purchase?

Purchased goodwill should

Periodic alterations to existing products are an example of research and development costs.

The increased acceptance of IFRS has caused costs associated with internally generated intangible assets to be capitalized under U.S. GAAP.

During 2015, Bond Company purchased the net assets of May Corporation for $2,000,000. On the date of the transaction, May had $600,000 of liabilities. The fair value of May's assets when acquired were as follows: How should the $1,000,000 difference between the fair value of the net assets acquired ($3,000,000) and the cost ($2,000,000) be accounted for by Bond?

IFRS differs from U.S. GAAP in the development phase in that costs are capitalized once technological feasibility is achieved.

Which of the following legal fees should be capitalized?

Goodwill is considered a master valuation accounts because it measure the value of specifically identifiable intangible assets.

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?

Harrel Company acquired a patent on an oil extraction technique on January 1, 2014 for $6,250,000. It was expected to have a 10 year life and no residual value. Harrel uses straight-line amortization for patents. On December 31, 2015, the expected future cash flows expected from the patent were expected to be $750,000 per year for the next eight years. The present value of these cash flows, discounted at Harrel's market interest rate, is $3,500,000. At what amount should the patent be carried on the December 31, 2015 balance sheet?

When a patent is amortized, the credit is usually made to

Danks Corporation purchased a patent for $675,000 on September 1, 2013. It had a useful life of 10 years. On January 1, 2015, Danks spent $165,000 to successfully defend the patent in a lawsuit. Danks feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2015?

GAAP requires start-up costs and initial operating losses during the early years to be capitalized.

The cost of an intangible asset includes all of the following except

Which of the following is not considered research and development costs?