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Chapter 8 Intangible assets Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Which of the following items is not an intangible asset? a. Patent b. Land c. Copyright d. Trademark ANSWER: B Easy POINTS: 0 / 1 REF: page 269 2. Intangible assets are usually divided into which three categories? a. Patents, trademarks and copyrights b. Research and development, goodwill and other intangible assets c. Purchased intangible assets, internally generated intangible assets and goodwill d. Software, goodwill and other intangible assets ANSWER: B Easy POINTS: 0 / 1 REF: page 272 3. In the consolidated financial statements, goodwill represents any excess of the cost of the acquisition over the acquirer’s interest in the fair value of the identifiable assets and liabilities acquired as of the date of the exchange transaction. a. True b. False ANSWER: A Easy POINTS: 0 / 1 REF: pages 272, 273 4. Which of the following statements is false? a. Organization costs are the costs incurred during the process of establishing or incorporating a business. b. Organization costs are also called incorporation costs or setup costs. c. If recorded as intangible assets, organization costs are not amortized. d. Organization costs include incorporation fees, legal fees, underwriting fees, ing fees, and promotional fees. ANSWER: C Easy POINTS: 0 / 1 REF: page 274
5. The recognition of intangible assets allows their amortization over the period during which economic benefits are derived. Which principle is put into practice in this statement? a. Going concern principle b. Matching principle c. Prudence principle d. Accrual principle ANSWER: B Easy POINTS: 0 / 1 REF: page 277 6. What is the process called, where costs of an intangible asset are allocated over its useful life? a. Depletion b. Impairment c. Depreciation d. Amortization ANSWER: D Easy POINTS: 0 / 1 REF: page 279 7. Which of the following methods is not used to report changes in value of intangible assets? a. Capitalization b. Impairment c. Revaluation d. Amortization ANSWER: A Easy POINTS: 0 / 1 REF: page 279 8. Which of the following statements is correct? a. Amortization and impairment are exclusive concepts. b. Impairment is specific to intangible assets. c. Impairment is a systematic allocation of the cost of intangible assets. d. Countries that have not officially adopted a rule on impairment generally have some form of an equivalent concept. ANSWER: D Easy POINTS: 0 / 1 REF: pages 279, 280 9. Many s of financial statements see capitalization of R&D as a grave violation of which principle? a. Prudence principle b. Going concern principle c. Matching principle d. Accrual principle
ANSWER: A Easy POINTS: 0 / 1 REF: page 284 10. In what way(s) can costs be reported in the ing treatment of internally developed software for use by the developing firm itself? a. Expensed as a part of purchases of merchandise or of cost of goods sold. b. Only certain costs, such as costs of design, coding, testing, documentation, training materials, are capitalized as intangible asset. c. Expensed. d. Totally capitalized as intangible asset if amount is material. ANSWER: B Moderate POINTS: 0 / 1 REF: page 288