ACC 318 Final Study Set || Acknowledged Answers 100%.
Costs incurred internally to create intangibles are correct answers expensed as incurred
Which of the following costs incurred internally to create an intangible asset is generally
expensed? correct answers Research and development costs
One factor that is not considered in determining the useful life of an intangible asset is correct
answers salvage value.
The cost of successfully defending a patent suit should be correct answers capitalized and
amortized over the remaining estimated useful life of the patent.
Contreras Corporation acquired a patent on May 1, 2020. Contreras paid cash of $35,000 to the
seller. Legal fees of $1,500 were paid related to the acquisition. What amount should be debited
to the patent account? correct answers $36,500
Cash (35,000) + Legal Fees for Acquisition (1,500)
Jeff Corporation purchased a limited-life intangible asset for $375,000 on May 1, 2019. It has a
useful life of 10 years. What total amount of amortization expense should have been recorded on
the intangible asset by December 31, 2021? correct answers $100,000
Limited Life (375,000) / Useful Life 10 Years = 37,500 per year
37,500 * 2 full years + (37,500*8/12 years) = $100,000
Thompson Company incurred research and development costs of $100,000 and legal fees of
$40,000 to develop a patent. The patent has a legal life of 20 years and a useful life of 10 years.
What amount should Thompson record as Patent Amortization Expense in the first year? correct
answers $ 4,000
, The general ledger of Vance Corporation as of December 31, 2021, includes the following
accounts:Copyrights $ 50,000Deposits with advertising agency (will be used to promote
goodwill) 27,000Discount on bonds payable 70,000Excess of cost over fair value of identifiable
net assets ofAcquired subsidiary 480,000Trademarks 90,000In the preparation of Vance's balance
sheet as of December 31, 2021, what should be reported as total intangible assets? correct
answers $620,000.
Excess Cost over fair value (480,000) + Copyrights (50,000) + Trademarks (90,000) = 620,000
The following information is available for Barkley Company's patents:Cost $3,440,000Carrying
amount 1,920,000Expected future net cash flows 1,600,000Fair value 1,300,000Barkley would
record a loss on impairment of correct answers $ 620,000.
Carrying Amount (1,920,000) - Fair Value (1,300,000) = 620,000
Hall Co. incurred research and development costs in 2021 as follows:Materials used in research
and development projects $ 950,000Equipment acquired that will have alternate future uses in
future research and development projects 3,000,000Depreciation for 2021 on above equipment
500,000Personnel costs of persons involved in research and development projects
750,000Consulting fees paid to outsiders for research and development projects 300,000Indirect
costs reasonably allocable to research and development projects 225,000$5,725,000The amount
of research and development costs charged to Hall's 2021 income statement should be correct
answers $2,725,000.
Due to the nature of the items in the list you can simply take the final result of 5,725,000 -
Equipment acquired (3,000,000) = 2,725,000
Riley Co. incurred the following costs during 2021:Significant modification to the formulation of
a chemical product $160,000Trouble-shooting in connection with breakdowns during
commercial production 150,000Cost of exploration of new formulas 200,000Seasonal or other
periodic design changes to existing products 185,000Laboratory research aimed at discovery of
new technology 355,000In its income statement for the year ended December 31, 2021, Riley
should report research and development expense of correct answers $865,000.
Costs incurred internally to create intangibles are correct answers expensed as incurred
Which of the following costs incurred internally to create an intangible asset is generally
expensed? correct answers Research and development costs
One factor that is not considered in determining the useful life of an intangible asset is correct
answers salvage value.
The cost of successfully defending a patent suit should be correct answers capitalized and
amortized over the remaining estimated useful life of the patent.
Contreras Corporation acquired a patent on May 1, 2020. Contreras paid cash of $35,000 to the
seller. Legal fees of $1,500 were paid related to the acquisition. What amount should be debited
to the patent account? correct answers $36,500
Cash (35,000) + Legal Fees for Acquisition (1,500)
Jeff Corporation purchased a limited-life intangible asset for $375,000 on May 1, 2019. It has a
useful life of 10 years. What total amount of amortization expense should have been recorded on
the intangible asset by December 31, 2021? correct answers $100,000
Limited Life (375,000) / Useful Life 10 Years = 37,500 per year
37,500 * 2 full years + (37,500*8/12 years) = $100,000
Thompson Company incurred research and development costs of $100,000 and legal fees of
$40,000 to develop a patent. The patent has a legal life of 20 years and a useful life of 10 years.
What amount should Thompson record as Patent Amortization Expense in the first year? correct
answers $ 4,000
, The general ledger of Vance Corporation as of December 31, 2021, includes the following
accounts:Copyrights $ 50,000Deposits with advertising agency (will be used to promote
goodwill) 27,000Discount on bonds payable 70,000Excess of cost over fair value of identifiable
net assets ofAcquired subsidiary 480,000Trademarks 90,000In the preparation of Vance's balance
sheet as of December 31, 2021, what should be reported as total intangible assets? correct
answers $620,000.
Excess Cost over fair value (480,000) + Copyrights (50,000) + Trademarks (90,000) = 620,000
The following information is available for Barkley Company's patents:Cost $3,440,000Carrying
amount 1,920,000Expected future net cash flows 1,600,000Fair value 1,300,000Barkley would
record a loss on impairment of correct answers $ 620,000.
Carrying Amount (1,920,000) - Fair Value (1,300,000) = 620,000
Hall Co. incurred research and development costs in 2021 as follows:Materials used in research
and development projects $ 950,000Equipment acquired that will have alternate future uses in
future research and development projects 3,000,000Depreciation for 2021 on above equipment
500,000Personnel costs of persons involved in research and development projects
750,000Consulting fees paid to outsiders for research and development projects 300,000Indirect
costs reasonably allocable to research and development projects 225,000$5,725,000The amount
of research and development costs charged to Hall's 2021 income statement should be correct
answers $2,725,000.
Due to the nature of the items in the list you can simply take the final result of 5,725,000 -
Equipment acquired (3,000,000) = 2,725,000
Riley Co. incurred the following costs during 2021:Significant modification to the formulation of
a chemical product $160,000Trouble-shooting in connection with breakdowns during
commercial production 150,000Cost of exploration of new formulas 200,000Seasonal or other
periodic design changes to existing products 185,000Laboratory research aimed at discovery of
new technology 355,000In its income statement for the year ended December 31, 2021, Riley
should report research and development expense of correct answers $865,000.
