1.)
Identifiable intangible assets include all of the following, except *
A. Copyright
B. Patent
C. Computer software
D. Leasehold improvement
2.)
Which is not considered a research and development activity? *
A. Conceptual formulation and design of possible product or process.
B. Laboratory research aimed at discovery of new knowledge.
C. Routine on-going effort to refine, enrich or improve quality of existing product.
D. Design, construction and operation of a pilot plant.
3.)
Good will should *
A. Not be amortized but tested for impairment at least annually.
B. Be written off against income.
C. Be amortized systematically over the useful life.
D. Be amortized against retained earnings.
4.)
Which is a characteristic of an intangible asset? *
A. Long-lived
B. Physical existence
C. Held for sale
D. Claim for a specific amount of cash
5.)
An entity is performing an annual test of the impairment of goodwill for a cash-generating unit. It has determined that the fair value of the unit exceeds the carrying amount. Which statement is true concerning the test of impairment? *
A. Goodwill should be retested at the entity level.
B. The assets and liabilities should be valued to determine if there has been an impairment of goodwill.
C. Goodwill should be written down as impaired.
D. Impairment is not indicated and no additional analysis is necessary.
6.)
The following expenditures shall be expensed when incurred, except *
A. Business relocation or reorganization costs
B. Payment in advance of delivery of goods or the rendering of services.
C. Start up costs
D. Advertising and promotion costs
7.)
Which statement is correct concerning the amortization of an intangible asset? Statement 1: Intangible assets with finite life are amortized over their useful life. Statement 2: Intangible assets with indefinite life are not amortized but tested for impairment at least every two years. *
A. Statement 2 only
B. Statement 1 only
C. Both statement 1 and 2.
D. Neither statement 1 nor 2.
8.)
A purchased patent that has a remaining legal life of 15 years should be *
A. Amortized over 15 years regardless of the useful life.
B. Expensed in the year of acquisition
C. Amortized over its useful life if less than 15 years.
D. Amortized over 20 years
9.) A trademark is an example of which category of intangible asset? *
A. Artistic-related
B. Market-related
C. Customer-related
D. Contract-based
10.)
An intangible asset is identifiable when *
A. It arises from contractual and other legal right.
B. It is neither separable nor it arises from contractual and other legal right.
C. It is separable
D. It is either separable or it arises from contractual and other legal right.
11.)
Which is incorrect concerning the criterion of control by the enterprise of the intangible asset? *
A. Market and technical knowledge may give rise to future economic benefits which can be controlled by the enterprise if the knowledge is protected by legal rights such as copyright.
B. An enterprise controls an asset if the enterprise has the power to obtain the future economic benefits flowing from the underlying resource and also can restrict the access of others to those benefits.
C. The capacity of the enterprise to control the economic benefits from an intangible asset would normally stem from legal rights that are enforceable in a court of law.
D. The skill of employees arising out of the benefits of training costs can be recognized as intangible asset.
12.) When a patent is amortized, the credit is usually made to *
A. As accumulated amortization account
B. The patent account
C. An accumulated depreciation account
D. An expense account
13.) One factor that is not considered in determining the useful life of an intangible asset is *
A. Provision for renewal or extension
B. Expected action of competitors
C. Residual value
D. Legal life
14.) Operating losses incurred during the start-up years of a new entity should be *
A. Accounted for like any other operating loss
B. Capitalized and amortized over five years.
C. Capitalized as an intangible asset and amortized over twenty years.
D. Written off directly against retained earnings.
15.) Which of the following items would qualify as an intangible asset? *
A. College tuition fees paid to employees who decide to enroll in an executive MBA program while working with the company.
B. Advertising and promotion on the launch of a huge product.
C. Operating losses during the initial stages of the project.
D. Legal costs paid to intellectual property lawyers to register a patent.
16.) Which cost associated with a trademark should not be capitalized? *
A. Design cost
B. Consulting fee
C. Attorney fee
D. Research and development fee
17.) Intangible assets are classified as *
A. Limited life and indefinite life
B. Amortizable and unamortizable
C. Legally restricted and goodwill type
D. Specifically identifiable and goodwill type
18.) After initial recognition, an intangible asset shall be measured using *
A. Cost model or revaluation model
B. Cost model or fair value model
C. Cost model
D. Revaluation model
19.) Goodwill should be tested periodically for impairment *
A. At the subsidiary level
B. For the entity as a whole
C. At the industry segment level
D. At the operating segment level
20.) Which is a research and development cost? *
A. Research and development performed under contract for others
B. Development or improvement of technique and process
C. Offshore oil exploration that is the primary activity of an entity
D. Market research related to a major product for the entity
21.) A computer software purchased as an integral part of a computer-controlled machine tool that cannot operate without the specific software shall be treated as *
A. Intangible asset
B. Inventory
C. Expense
D. Property, plant and equipment