Chapter 8: Intangible assets

Which of the following items is not an intangible asset? (Difficulty: Easy)
1. Patent
2. Land
3. Copyright
4. Trademark
Intangible assets are usually divided into which three categories? (Difficulty: Easy)
1. Patents, trademarks and copyrights
2. Research and development, goodwill and other intangible assets
3. Purchased intangible assets, internally generated intangible assets and goodwill
4. Software, goodwill and other intangible assets
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. (Difficulty: Easy)
1. True
2. False
Which of the following statements is false? (Difficulty: Easy)
1. Organization costs are the costs incurred during the process of establishing or incorporating a business.
2. Organization costs are also called incorporation costs or set-up costs.
3. If recorded as intangible assets, organization costs are not amortized.
4. Organization costs include incorporation fees, legal fees, underwriting fees, accounting fees, and promotional fees.
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? (Difficulty: Easy)
1. Going concern principle
2. Matching principle
3. Prudence principle
4. Accrual principle
What is the process called, where costs of an intangible asset are allocated over its useful life? (Difficulty: Easy)
1. Depletion
2. Impairment
3. Depreciation
4. Amortization
Which of the following methods is not used to report changes in value of intangible assets? (Difficulty: Easy)
1. Capitalization
2. Impairment
3. Revaluation
4. Amortization
Which of the following statements is correct? (Difficulty: Easy)
1. Amortization and impairment are exclusive concepts.
2. Impairment is specific to intangible assets.
3. Impairment is a systematic allocation of the cost of intangible assets.
4. None of these.
Many users of financial statements see capitalization of R&D as a grave violation of which principle? (Difficulty: Easy)
1. Prudence principle
2. Going concern principle
3. Matching principle
4. Accrual principle
In what way(s) can costs be reported in the accounting treatment of internally developed software for use by the developing firm itself? (Difficulty: Difficult)
1. Expensed as a part of purchases of merchandise or of cost of goods sold
2. Only certain costs, such as costs of design, coding, testing, documentation, training materials, are capitalized as intangible asset
3. Expensed
4. Totally capitalized as intangible asset if amount is material

Chapter 8: Intangible assets

Quiz