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Exam 12: Intangible Assets

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Question 21

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On June 2, 2011, Olsen Inc.purchased a trademark with a cost €4,720,000.The trademark is classified as an indefinite-life intangible asset.At December 31, 2011 and December 31, 2012, the following is available for impairment testing: The 2012 income statement will report

A) no Impairment Loss or Recovery of Impairment.
B) Impairment Loss of €40,000.
C) Recovery of Impairment of €40,000.
D) Recovery of Impairment of €100,000.

E) B) and C)
F) C) and D)

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Question 22

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After an impairment loss is recorded for goodwill, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods.

A) True
B) False

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Question 23

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The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned.

Which of the following does not describe intangible assets?

The reason goodwill is sometimes referred to as a master valuation account is because

Limited-life intangibles are amortized by systematic charges to expense over their useful life.

Which of the following methods of amortization is normally used for intangible assets?

Which of the following should not be reported under the "Other income and expense" section of the income statement?

Ely Co.bought a patent from Baden Corp.on January 1, 2011, for $300,000.An independent consultant retained by Ely estimated that the remaining useful life at January 1, 2011 is 15 years.Its unamortized cost on Baden's accounting records was $150,000; the patent had been amortized for 5 years by Baden.How much should be amortized for the year ended December 31, 2011 by Ely Co.?

On May 5, 2011, MacDougal Corp.exchanged 2,000 shares of its $25 par value treasury ordinary shares for a patent owned by Masset Co.The treasury shares were acquired in 2010 for $45,000.At May 5, 2011, MacDougal's ordinary shares was quoted at $34 per share, and the patent had a carrying value of $55,000 on Masset's books.MacDougal should record the patent at

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 allowed to be capitalized?

Use the following information for questions. On January 1, 2011, Dillman Inc.purchased a patent with a cost €3,480,000, a useful life of 5 years.The company uses straight-line depreciation.At December 31, 2012, the company determines that impairment indicators are present.The fair value less costs to sell the patent is estimated to be €1,620,000.The patent's value-in-use is estimated to be €1,695,000.The asset's remaining useful life is estimated to be 2 years. -The company's 2013 income statement will report amortization expense for the patent of

Use the following information for questions. On January 2, 2011, Lutz Inc.purchased a patent with a cost CHF940,000 a useful life of 4 years.At December 31, 2011, and December 31, 2012, the company determines that impairment indicators are present.The following information is available for impairment testing at each year end: No changes were made in the asset's estimated useful life. -The company's 2012 income statement will report

During 2011, Leon Co.incurred the following costs: In Leon's 2011 income statement, research and development expense should be

India Enterprises has four divisions.It acquired one of them, Bombay Products, on January 1, 2011 for Rs400,000,000, and recorded goodwill of Rs50,750,000 as a result of that purchase.At December 31, 2011, Bombay products had a recoverable amount of Rs370,000,000.The carrying value of the company's net assets at December 31, 2011 was Rs355,000,000 (including goodwill) .What amount of loss on impairment of goodwill should India record in 2011?

All research phase and development phase costs are expensed as incurred.

Which characteristic is not possessed by intangible assets?

On June 30, 2011, Cey, Inc.exchanged 2,000 shares of Seely Corp.$30 par value ordinary shares for a patent owned by Gore Co.The Seely stock was acquired in 2011 at a cost of $55,000.At the exchange date, Seely ordinary shares had a fair value of $46 per share, and the patent had a net carrying value of $110,000 on Gore's books.Cey should record the patent at

Use the following information for questions. On January 2, 2011, Ace Inc.purchased a patent with a cost CHF1,880,000, and a useful life of 4 years.At December 31, 2011, and December 31, 2012, the company determines that impairment indicators are present.The following information is available for impairment testing at each year end: No changes were made in the asset's estimated useful life. -The company's 2012 income statement will report

Which intangible assets are amortized?