ACC 304 FINAL EXAM
ACC 304 Final Exam
Week 11 Final Exam: Chapter 12 Through 16
IFRS questions are available at the end of this chapter.
1. Intangible assets derive their value from the right (claim) to receive cash in the future.
2. Internally created intangibles are recorded at cost.
3. Internally generated intangible assets are initially recorded at fair value.
4. Amortization of limited-life intangible assets should not be impacted by expected residual values.
5. Some intangible assets are not required to be amortized every year.
6. Limited-life intangibles are amortized by systematic charges to expense over their useful life.
7. The cost of acquiring a customer list from another company is recorded as an intangible asset.
8. The cost of purchased patents should be amortized over the remaining legal life of the patent.
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.
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.
11. Internally generated goodwill should not be capitalized in the accounts.
12. 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.
13. All intangibles are subject to periodic consideration of impairment with corresponding potential write-downs.
14. If the fair value of an unlimited life intangible other than goodwill is less than its book value, an impairment loss must be recognized.
15. If market value of an impaired asset recovers after an impairment has been recognized, the impairment may be reversed in a subsequent period.
16. The same recoverability test that is used for impairments of property, plant, and equipment is used for impairments of indefinite-life intangibles.
17. Periodic alterations to existing products are an example of research and development costs.
18. Research and development costs that result in patents may be capitalized to the extent of the fair value of the patent.
19. Research and development costs are recorded as an intangible asset if it is felt they will provide economic benefits in future years.
20. Contra accounts must be reported for intangible assets in a manner similar to accumu-lated depreciation and property, plant, and equipment.
True False Answers—Conceptual
21. 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.
22. Which of the following characteristics do intangible assets possess?
a. Physical existence.
b. Claim to a specific amount of cash in the future.
d. Held for resale.
23. Which characteristic is not possessed by intangible assets?
a. Physical existence.
c. Result in future benefits.
d. Expensed over current and/or future years.