Exam 3

Question 1

1.

Common types of intangibles

Answer 1

• patents
• copyrights
• franchises or licenses
• trademarks or trade names
• goodwill

Question 2

When do you record a loss on impairment?

Answer 2

When the future net cash flows is less than the carrying value of the asset. Then you subtract the fair value from the carrying value.

Question 3

How often must you test indefinite-life intangibles for impairment

Answer 3

atleast annualy

Question 4

What is the test for an indefinite-life intangible

Answer 4

If the carrying value is more than the fair value, you must record loss on impairement

Question 5

Five major categoreis of intangible assets

Answer 5

• marketing related
• customer realted
• artiostic related
• contract related
• technology related

Question 6

Customer related intangible assets

Answer 6

Customer lists, order or production backlogs, and customer relationships
- amortize to expense over useful life

Question 6

Marketing related intangible assets

Answer 6

trademarks or trade name (usually for companies)
- No amortization
- Indefinite life with small costs for 10 year renewal periods

Question 7

Artistic related intangible assets

Answer 7

palys, literary works, video, photography, music
- copyright granted for the life of the createer PLUS 70 years

Question 8

Contract related intangible assets

Answer 8

Franchise & licensing, construction permits, broadcasting rights
- NFL, Marriott, Fox

Question 9

Technology related intangible assets

Answer 9

patented techonolgy and trade secrets gratned by the US patent and Trademark office
- Patent gives holder exclusive use for 20 years
- Amortize over the SHORTER of legal life (20 years) or useful life

Question 10

Federal Unemployment Tax Act (FUTA)

Answer 10

Rate is 6%, BUT if employer also pays a state unemployment tax, then 5.2% or more receives a tax credit (not to excceed 5.4%)
- so basicly its only taxed at .06-.08%

Question 11

Social Security tax (FICA)

Answer 11

In total = 7.65%

Question 12

Unpaid and paid bonuses

Answer 12

• Bonuses are an operating expense
• Unpaid bonuses should be reported as a current liability

Question 13

Sales taxes payable

Answer 13

Are current liabilities on the balance sheet

Question 14

Current Liabilities

Answer 14

• Accounts Payable
• Notes Payable (short term)
• Sales tax payable
• Income tax payable
• Employee-related payable