Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Which of the following items is not an
intangible asset?
a. | Patent | b. | Land | c. | Copyright | d. | Trademark
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2.
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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 |
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3.
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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.
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4.
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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 set-up
costs. | c. | If recorded as intangible assets, organization costs are
not amortized. | d. | Organization costs
include incorporation fees, legal fees, underwriting fees, accounting fees, and promotional
fees. |
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5.
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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
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6.
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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
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7.
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Which of the following methods is not used
to report changes in value of intangible assets?
a. | Capitalization | b. | Impairment | c. | Revaluation | d. | Amortization
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8.
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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. |
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9.
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Many users 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
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10.
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In what way(s) can costs be reported in the
accounting 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.
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