Accounting 5110 exam two Questions and Answers Already Passed
1. lack physical existence, derive value from the rights and privileges granted to the company
2. non financial instruments - Answers what are the main characteristics of an intangible asset
- Generally expensed
- Only capitalize direct costs incurred in developing the intangible, such as legal costs - Answers
internally created intangibles
limited life tangibles - Answers companies only amortize their
an indefinite life - Answers a trade mark or trade name has
intangible assets that occur as a result of interactions with outside parties, like customer lists,
contractual agreements and production backlogs - Answers Customer-related intangible assets
amortized over their useful life - Answers customer related intangibles should be
operating expense - Answers a company should amortize the cost of a franchise or license with a limited
life as an ______ _____ over the useful life
NOT - Answers payments made to franchise fees do ____ represent an asset because they do not relate
to the future rights to use the property
shorter - Answers companies should amortize the cost of a patent over its legal life or its useful life,
whichever is
measured as the excess of the cost of purchase over the fair value of the net identifiable assets
purchased - Answers Goodwill
NOT - Answers goodwill generated internally should ____ be capitalized in the accounts
NOT - Answers goodwill is considered to have an indefinite life and therefore should ___ be amortized
gain - Answers in a bargain purchase situation the excess amount is recorded as a
A test to determine whether an impairment of a long-lived asset has occurred. If the sum of the
expected future net cash flows (undiscounted) is less than the carrying amount of the asset, the asset is
considered impaired. - Answers recoverability test
This test measures the impairment loss by comparing the asset's fair value with its carrying amount -
Answers fair value test
fair value - Answers intangibles, except goodwill, should only use the ____ ____ test when testing for
impairment
1. lack physical existence, derive value from the rights and privileges granted to the company
2. non financial instruments - Answers what are the main characteristics of an intangible asset
- Generally expensed
- Only capitalize direct costs incurred in developing the intangible, such as legal costs - Answers
internally created intangibles
limited life tangibles - Answers companies only amortize their
an indefinite life - Answers a trade mark or trade name has
intangible assets that occur as a result of interactions with outside parties, like customer lists,
contractual agreements and production backlogs - Answers Customer-related intangible assets
amortized over their useful life - Answers customer related intangibles should be
operating expense - Answers a company should amortize the cost of a franchise or license with a limited
life as an ______ _____ over the useful life
NOT - Answers payments made to franchise fees do ____ represent an asset because they do not relate
to the future rights to use the property
shorter - Answers companies should amortize the cost of a patent over its legal life or its useful life,
whichever is
measured as the excess of the cost of purchase over the fair value of the net identifiable assets
purchased - Answers Goodwill
NOT - Answers goodwill generated internally should ____ be capitalized in the accounts
NOT - Answers goodwill is considered to have an indefinite life and therefore should ___ be amortized
gain - Answers in a bargain purchase situation the excess amount is recorded as a
A test to determine whether an impairment of a long-lived asset has occurred. If the sum of the
expected future net cash flows (undiscounted) is less than the carrying amount of the asset, the asset is
considered impaired. - Answers recoverability test
This test measures the impairment loss by comparing the asset's fair value with its carrying amount -
Answers fair value test
fair value - Answers intangibles, except goodwill, should only use the ____ ____ test when testing for
impairment
