WSU Accounting 230 Exam 3: In Class Quizzes || Answered & Graded

True or false: Patents are generally amortized. - Correct Answer True. True or false: Trademarks are generally amortized. - Correct Answer False (have a definite life). True or false: Copyrights are generally amortized. - Correct Answer True. True or false: Franchise liscenses are generally amortized. - Correct Answer True. True or false: Incorporation costs can be capitalized. - Correct Answer False; must be expensed. True or false: Internally developed patent costs can be capitalized. - Correct Answer False; must be expensed. True or false: Trademark costs can be capitalized. - Correct Answer True. Which type of accounting element is Amortization? - Correct Answer Expense. Where is Amortization found on the financial statements? - Correct Answer Income Statement. True or false: Only intangible assets are amortized. - Correct Answer True. True or false: Generally uses the straight-line method for calculation. - Correct Answer True. True or false: Amortization is always accumulated in the Accumulated Amortization account of the balance sheet. - Correct Answer False; the Amortization credits the account itself (rather than accumulating in an individual account called Accumulated Amortization). True or false: Amortization is calculated by dividing the cost by the estimated useful economic life of the asset. - Correct Answer True. True or false: Goodwill is capitalized only when a company purchases another company for the net fair market value of assets and liabilities received from the company purchased. - Correct Answer False; goodwill is only capitalized when a company purchases another company for ABOVE the net fair market value. True or false: We expense internally generated intangible assets, such as research and development and advertising costs, as we incur them. - Correct Answer True. True or false: Intangible assets with an indefinite useful life are not amortized. - Correct Answer True. True or false: Repairs and maintenance for an asset is capitalized. - Correct Answer False; these are expensed. True or false: Plant assets can be disposed of by discarding, selling, or exchanging them. - Correct Answer True. True or false: If an asset is sold above its book value, the selling company records a loss. - Correct Answer False; that is called a GAIN. True or false: Gain or loss on the disposal of assets is determined by comparing the disposed asset's book value to the market value of any assets received. - Correct Answer True.