Intermediate Accounting Chapter 12 Exam Questions and Complete Answers Already Passed

Intermediate Accounting Chapter 12 Exam Questions and Complete Answers Already Passed If a company develops and registers a trademark in-house, how should they handle the accounting for the fees associated with registering the trademark? A : Costs should be capitalized and amortized over its useful life. B : Costs should be expensed as incurred. C : Costs should be charged to an asset account that should not be amortized. D : Costs should be capitalized and amortized over 10 years regardless of its useful life. - Answers C Which of the following are intangible assets? I. Franchises. II. Accounts receivable. III. Patents. IV. Copyrights. A : II, III, and IV. B : I, II, and III. C : I, III, and IV. D : I, II, and IV. - Answers C A company plans to amortize an intangible asset. When they journalize the amortization amount, they should debit an expense account and credit A : both the intangible asset account and an associated accumulated amortization account. B : either the intangible asset account or an associated accumulated amortization account. C : the accumulated amortization account but not the intangible asset account. D : the intangible asset account but not the accumulated amortization account. - Answers B For companies using GAAP, they should characterize their intangible assets as either A : legally restricted or goodwill-type. B : amortizable or unamortizable. C : specifically identifiable or goodwill-type. D : limited-life or indefinite-life. - Answers D Which of the following characteristics are considered when determining the useful life of an intangible asset? I. Expected actions of competitors. II. Salvage value, except when it is of value to another company. III. Provisions for renewal or extension. IV. Legal life. A : I, II, and IV. B : I, II, and III. C : II, III, and IV. D : I, III, and IV. - Answers D Jamison Enterprises acquired a franchise to operate a Good Burger Joint in January, 2013. The cost of the franchise was $360,000 and was estimated to have a limited life of 30 years. Early in the year 2018, the franchise was forced out of business due to lawsuits. Jamison should record which of the following series of expenses to their income statement for the years noted? A : d. B : b. C : c. D : a. - Answers C Costs associated with developing a trademark or trade name should be capitalized if they result from: I. Consulting fees. II. Design costs. III. Attorney fees. IV. Research and development cost. A : I, II, and III. B : II, III, and IV. C : I, III, and IV. D : I, II, and IV. - Answers A Which of the following is true about goodwill? A : Goodwill exists in any company that has earnings that differ from those of a competitor. B : Goodwill is easily computed by assigning a value to the individual attributes that comprise its existence. C : Goodwill represents a unique asset in that its value can be identified only with the business as a whole. D : Goodwill generated internally should not be capitalized unless it is measured by an individual independent of the enterprise involved. - Answers C Which of the following statements is true about the amortization of goodwill?