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Trademarks or trade names

Question 1

Trademarks or trade names

must be renewed every 40 years

can be considered intangibles with indefinite lives

are developed internally and thus should not have any related costs capitalized and amortized

are synonymous with internally developed goodwill

Question 2

The factors involved in computing periodic depreciation charges for an asset do not include the

method of cost allocation

current value of the asset

service life

residual value of the asset

Question 3

Which of the following statements concerning internally developed goodwill is true?

it is a separately identifiable asset

it is capitalized at its cost

the costs associated with its development are expensed as incurred

measuring its value is relatively easy and reliable

Question 4

Software production costs related to computer software that is to be sold, leased, or otherwise marketed should be accounted for in which of the following ways:

all software production costs should be recorded as R&D expense

all software production costs should be capitalized

all software production costs should be recorded in R&D expense until technological feasibility is established

all software production costs should be recorded in R&D expense until the product is available for general release to customers

Question 5

Which one of the following statements is true?

The activity method of computing depreciation could result in zero depreciation expense in some periods of time.

If the activity method is in use, residual value should not be subtracted from cost to determine the depreciation base.

The activity method produces a constant unit cost of depreciation.

The activity method should be used when the service life of the asset is affected mostly by the passage of time.

Question 6

On January 1, 2004, Central Products, Inc., purchased 500 condensers for line use at a cost of $2,000 each. In 2005, two condensers had to be replaced at a cost of $2,500 each. Which one of the following statements is not true?

in 2005, there will be depreciation expense of $5,000 if the replacement depreciation method is in use

in 2004, there will not be any depreciation expense recorded if the retirement depreciation method is in use

in 2005, there will be $4,000 of depreciation expense if the replacement depreciation method is in use

in 2005, the retirement depreciation method will result in less depreciation expense than the replacement depreciation method

Question 7

During 2006, Rockon Company, Inc. incurred $240,000 in legal fees in defending a patent against an infringement with a carrying value of $2,500,000. Rockon┬┐s lawyers were not successful with the defense of the patent. The legal fees should be

expensed in 2006 and classified as ordinary expense

classified as an extraordinary item on the income statement for 2006

capitalized and amortized over the remaining legal life of the patent

capitalized and amortized over the remaining economic life or legal life of the patent, whichever is shorter

Question 8

FASB Statement No. 2 requires that research and development costs be

capitalized

expensed as incurred

accumulated until the existence of future benefits is determined

expensed in part and capitalized in part

Question 9

Which depreciation method calculates annual depreciation expense based on the book value of an asset?

double-declining balance

sum-of-the-years'-digits

inventory systems

group depreciation

Question 10

Which amortization method should be used for intangibles that are amortized?

a method based on the expected pattern of benefits to be produced by the asset

a method based on an annual review for impairment

the straight-line method; all others are inappropriate

any method is appropriate

Question 11

Which one of the following statements is not a disclosure requirement for depreciation?

the balance of major classes of depreciable assets

a general description of the method(s) used for depreciation

the accumulated depreciation for each major class of depreciable asset

the useful lives for each major class of depreciable asset

Question 12

Which statement regarding goodwill is true?

goodwill is an unidentifiable intangible asset

internally developed goodwill should be capitalized while purchased goodwill should be expensed

goodwill can be defined as the value attached to the ability of a company to earn a higher than normal rate of return on the book value of its identifiable assets

in some situations, FASB Statement No. 141 requires that negative goodwill be recorded

Question 13

What effect does depreciation have on the calculation of the rate of return on total assets?

affects both the numerator and denominator

no effect

increases it

decreases it

Question 14

Concerning computer software to be sold, leased, or otherwise marketed, which of the following costs are inventoriable and thus included in cost of goods sold?

maintenance and customer support costs

design, coding, and testing costs incurred before technological feasibility is established

costs of software developed for internal use

costs of disks, software duplication, and training materials

Question 15

The Pecan Street Ice Cream Company discovers that depreciation expense was overstated last year. How should this discovery be reported in the current year?

as a reduction in the current year's depreciation expense

as an increase to the retained earnings beginning balance

as a miscellaneous item in the Other Revenue/Expense section of the income statement

as a footnote only to the current year's financial statements

Question 16

Which of the following expenditures cannot be included in R&D costs?

indirect costs

intangibles purchased from others

personnel costs

contract services performed for others

Question 17

Which of the following is not a required disclosure regarding goodwill for each period a company presents a balance sheet?

the amount of goodwill acquired

the amount of goodwill sold

the amount of any impairment loss recognized

the amount of any goodwill included in the disposal of a reporting unit

Question 18

Related to in-process R&D the acquiring company may:

capitalize it.

treat it as an intangible asset.

increase the amount of goodwill.

establish a patent in the name of the purchased company.

Question 19

Which one of the following disclosures is required by generally accepted accounting principles?

depreciation expense for each major class of asset

balances of major classes of depreciable assets, by nature or function

accumulated depreciation on each depreciable asset

an explanation of why the depreciation method used was selected by management

Question 20

Which of the following methods is used to amortize intangible assets over their useful lives?

a declining balance method

straight line

annual review for impairment

intangible assets are not amortized

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Solution Preview

Question 1

Trademarks or trade names

must be renewed every 40 years

can be considered intangibles with indefinite lives

are developed internally and thus should not have any related costs capitalized and amortized

are synonymous with internally developed goodwill

can be considered intangibles with indefinite lives
http://en.wikipedia.org/wiki/Trademark

Question 2

The factors involved in computing periodic depreciation charges for an asset do not include the

method of cost allocation

current value of the asset

service life

residual value of the asset

current value of the asset

Question 3

Which of the following statements concerning internally developed goodwill is true?

it is a separately identifiable asset

it is capitalized at its cost

the costs associated with its development are expensed as incurred

measuring its value is relatively easy and reliable

the costs associated with its development are expensed as incurred

http://www.principlesofaccounting.com/questions%20-%20%20multiple%20choice/chapter%2011%20-%20multiple%20choice.htm#10. d.

Question 4

Software production costs related to computer software that is to be sold, leased, or otherwise marketed should be accounted for in which of the following ways:

all software production costs should be recorded as R&D expense

all software production costs should be capitalized

all software production costs should be recorded in R&D expense until technological feasibility is established

all software production costs should be recorded in R&D expense until the product is available for general release to customers

all software production costs should be recorded in R&D expense until technological feasibility is established

Question 5

Which one of the following statements is true?

The activity method of computing depreciation could result in zero depreciation expense in some periods of time.

If the activity method is in use, residual value should not be subtracted from cost to determine the depreciation base.

The activity method produces a constant unit cost of depreciation.

The ...

Solution Summary

Response discusses the Trademarks or trade names

$2.19