Chapter 11

Question 1

What are the characteristics of a Intangible Asset

Answer 1

1.) Lack of physical existence
2.) Not financial instruments

Question 2

What are common types of intangible assets

Answer 2

Patents, Copyrights, Trademarks, Franchises, Goodwill

Question 3

What is included for cost of an intangible

Answer 3

• Purchase price
  -Legal Fees

Question 4

What is the rule for limited life intangibles

Answer 4

Two steps (same as PP&E)

Question 5

How do you determine impairment for indefinite life intangibles

Answer 5

Carrying value - Fair value

Question 6

With indefinite life intangibles why do you not do the recoverability test

Answer 6

because it is hard to predict future cash flows

Question 7

how often must you test for impairment on indefinite life intangibles

Answer 7

every year

Question 8

What is goodwill

Answer 8

Excess cost of the purchase over the fair value of the asset purchased

Question 9

can you capitalize internally created goodwill

Answer 9

no

Question 10

How do you test for impairment of goodwill

Answer 10

Carrying value of entire unit - FV of entire unit

Question 11

what happens to R&D

Answer 11

expense when cost is incurred