Intangibles

Question 1

means that the asset lacks physical substance

Answer 1

intangible

Question 2

2 types of intangibles

Answer 2

1. intangible (identifiable)
2. goodwill

Question 3

intangible assets

Answer 3

• patent
• copyright
• trademarks
• customer list
• franchise
• license

Question 4

enables holder to use, manufacture, sell, and control the item or activity

Answer 4

patent

Question 5

who has exclusive right to recognize U.S. patents

Answer 5

U.S. patent office

Question 6

patent usually good for

Answer 6

20 years

Question 7

cost of obtaining a patent
capitalized or not capitalized

Answer 7

capitalized
- fee we pay to U.S. patent office
- hire an outside lawyer

Question 8

costs of developing the patentable technology
capitalized or not capitalized

Answer 8

do not capitalized
- salaries paid to engineers
- internal lawyer who handles patenting

Question 9

• right to reprint, sell, or distribute copies and to perform and record the work
• form of protection given by law to authors of literary, musical, artistic, and similar works
• finite lived

Answer 9

copyright

Question 10

how longs a copyright good for

Answer 10

life of the author plus 70 years

Question 11

• name, symbol, or distinctive identity given to a company, product, or service
• finite or indefinite lived

Answer 11

trademarks

Question 12

how long can trademarks last

Answer 12

can be renewed for successive 10 year periods

Question 13

• compilation of ucstomer information including names and contact information
• finite or indefinite lived

Answer 13

customer list

Question 14

grantd by franchiser for the right use a particular name and offer specified services and products
- restaurants, hotels, repair shops
- finite lived

Answer 14

franchise

Question 15

contractual operating rights

Answer 15

license

Question 16

either finite or indefinite-lived
when developed internally capitalize at

Answer 16

purchase price

Question 17

either finite or indefinite-lived
when acquired/ purchased capitalize at

Answer 17

purchase price => fair value

Question 18

amortize over the short or legal or useful life

Answer 18

finite-lived

Question 19

journal entry for finite-lived

Answer 19

Dr. amortization expense (-SE)
Cr. asset (patent)

Question 20

do not amortize

Answer 20

indefinite-lived

Question 21

compare carrying value (book value) to fair value

Answer 21

impairment

Question 22

3 steps to disposing of intangibles

Answer 22

1. amortize the asset up to the date of disposal
2. calculate gain or loss
3. remove the carrying value

Question 23

arises when a company acquires another company and the purchase price exceeds the fair value of the identifiable net assets acquired in the purchase

Answer 23

goodwill

Question 24

assets identified in the acquisitions during goodwill

Answer 24

• all intangible assets (inventory, ppe)
• financial assets (ar, investments)
• identifiable intangible assets (patents, copyrights)

Question 25

1. reputation 2. desirable physical location 3. workforce 4. trade secrets 5. synergies 6. overpayments

Answer 25

6 examples of things left that we cannot identify as assets during goodwill

Question 26

when preparing the goodwill impairment, we compare the carrying value of the division to the fair value of the

Answer 26

division

Question 27

when preparing the goodwill impairment of identifiable intangibles, we compare the carrying value of the asset to the fair value of the

Answer 27

asset