ACC 300 Chapter 12

Question 1

Purchased intangible assets

Answer 1

Recorded at cost. Includes purchased price, legal fees and other incidental expenses

Question 2

Internally created intangibles

Answer 2

Only direct cost are capitalized (legal fees) recognized as expenses when incurred

Question 3

Limited life intangibles

Answer 3

Amortized over useful live.

Question 4

Factors effecting useful life

Answer 4

Expected use of asset, expected useful life, legal regulatory or contractual provisions, provisons to renew without substantial cost

Question 5

Indefinite life intangibles

Answer 5

Are not amotized but tested for impairement annually

Question 6

Trademarks and trade names

Answer 6

Not amortized

Question 7

Costomer related intangibles

Answer 7

Amortized. Risdual value is zero unless useful life is less than economic life and evidence for reaidual value

Question 8

Artistis related intangibles

Answer 8

Copyrights. Useful life usually less than legal life. Cost of defending are capitalized

Question 9

Contract related intagibles

Answer 9

Franchise

Question 10

Tech related intangibles

Answer 10

Patents. Amortized over useful life ot legal life which is shorter. Legal fees capitalized

Question 11

Goodwill recorded

Answer 11

When an entire business is purchased because goodwill is a going concern valuation and cannot be separated from the business as a whole

Question 12

Bargin purchase

Answer 12

Occurs when fair valie of net assrtd acquired is greater than the purchase price. Credit a gain

Question 13

R&D cost

Answer 13

Expensed unless they have alternative future uses

Question 14

Impairement of intangibles

Answer 14

Loss: excess of carrying amount over fair value. Amotize on new basis. No write up