11(b) pre-quiz study Flashcards
The excess cost of the purchase price over the fair market value of a company’s identifiable net assets is sometimes referred to as
master valuation account, gap filler, and/or goodwill
Is goodwill purchased or developed internally amortized?
No, neither
In a situation where the purchase price is less than the value of net identifiable assets, the excess amount is recorded as…
gain
The impairment rule for goodwill involves what?
the one step process: fair value test
Capitalizing goodwill only when it is purchased in an arm’s-length transaction, and not capitalizing any goodwill generated internally is an example of ________ winning out over _________.
faithful representation winning out over relevence
When the fair value is greater than the carrying value:
no impairment as occurred
The controversy surrounding the policy to expense all research and development costs associated with internally generated intangible assets results in:
understating assets and overstating expenses
Critical investigation aimed at discovery of new knowledge is considered what?
A research activity
not: construction of a prototype or operation of a pilot plant
Cost of marketing research for a new product should be (included/excluded) from R+D expenses?
excluded
included: modification of the design, acquisition of R&D equipment for use on current project only, activity needed to advance design state of a product to manufacturing.
Quality control during commercial production (is/isn’t) expensed as R&D?
is
Purchase of R&D facilities with alternative future uses will be capitalized
Impairment losses related to intangible assets and amortization expenses are reported on the income statement as:
both reported as part of income from continuing operations
goodwill generated INTERNALLY
not recorded
goodwill generated from a purchase of part of a business
recorded as an intangible asset
