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339104914 ch12 Test Bank intermediate accounting
Akuntansi (Universitas Padjadjaran)
Studocu is not sponsored or endorsed by any college or university
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CHAPTER 12
INTANGIBLE ASSETS
CHAPTER LEARNING OBJECTIVES
1. Describe the characteristics of intangible assets.
2. Identify the costs to include in the initial valuation of intangible assets.
3. Explain the procedure for amortizing intangible assets.
4. Describe the types of intangible assets.
5. Explain the accounting issues for recording goodwill.
6. Explain the accounting issues related to intangible asset impairments.
7. Identify the conceptual issues related to research and development costs.
8. Describe the accounting for research and development and similar costs.
9. Indicate the presentation of intangible assets and related items.
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12 - 2 Test Bank for Intermediate Accounting, IFRS Edition, 2e
TRUE-FALSE—Conceptual
1. Intangible assets derive their value from the right (claim) to receive cash in the future.
f
2. All research phase and development phase costs are expensed as incurred.
f
3. Research phase costs are capitalized as an intangible asset once the project has
economic viability.
f
4. Companies are required to assess the estimated useful life and salvage value of
intangible assets at least annually.
t
5. Impairment testing is conducted annually for both limited–life and indefinite-life intangible
assets.
f
6. Amortization of limited-life intangible assets should not be impacted by expected residual
values.
f
7. Some intangible assets are not required to be amortized every year.
t
8. Limited-life intangibles are amortized by systematic charges to expense over their useful
life.
t
9. The cost of acquiring a customer list from another company is recorded as an intangible
asset.
t
10. The cost of purchased patents should be amortized over the remaining legal life of the
patent.
f
11. If a new patent is acquired through modification of an existing patent, the remaining book
value of the original patent may be amortized over the life of the new patent.
t
12. In a business combination, a company assigns the cost, where possible, to the identifiable
tangible and intangible assets, with the remainder recorded as goodwill.
t
13. Goodwill is considered a master valuation account because it measures the value of
specifically identifiable intangible assets.
f
14. Internally generated goodwill should not be capitalized in the accounts.
t
15. Internally generated goodwill associated with a business may be recorded as an asset
when a firm offer to purchase that business unit has been received.
f
16. All intangibles are subject to periodic consideration of impairment with corresponding
potential write-downs.
t
17. If the recoverable amount of an indefinite-life intangible other than goodwill is less than its
carrying value, an impairment loss must be recognized.
t
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Intangible Assets 12 - 3
18. A cash-generating unit is the smallest identifiable group of assets in a business that can
generate cash flow independently of the cash flows from the business’s other assets.
t
19. The impairment test for goodwill is conducted based on the cash-generating unit to which
the goodwill has been assigned.
t
20. Recoveries of impairments for intangible long-lived assets are reported in "other income
and expense" on the income statement.
t
21. A recovery of impairment for an intangible long-lived asset is limited to the carrying value
that would have been reported had the impairment not occurred.
t
22. After an impairment loss is recorded for a limited-life intangible asset, the recoverable
amount becomes the basis for the impaired asset and is used to calculate amortization in
future periods.
t
23. After an impairment loss is recorded for goodwill, the recoverable amount becomes the
basis for the impaired asset and is used to calculate amortization in future periods.
f
24. Accounting for impairments for limited-life intangible assets follows the same rules used to
account for impairments of plant and equipment.
t
25. IFRS permits reversals of impairment losses for all limited and indefinite-life intangible
assets.
f
26. Periodic alterations to existing products are an example of research and development
costs.
f
27. Research and development costs that result in patents may be capitalized to the extent of
the fair value of the patent.
28. IFRS requires that start-up costs and initial operating losses during the early years be
capitalized.
29. Research and development costs are recorded as an intangible asset if it is felt they will
provide economic benefits in future years.
30. Contra accounts must be reported for intangible assets in a manner similar to the
reporting of property, plant, and equipment.
True False Answers—Conceptual
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
1. F 6. F 11. T 16. T 21. T 26. F
2. F 7. T 12. T 17. T 22. T 27. F
3. F 8. T 13. F 18. T 23. F 28. F
4. T 9. T 14. T 19. T 24. T 29. F
5. F 10. F 15. F 20. T 25. F 30. F
Downloaded by john gatheca ()
339104914 ch12 Test Bank intermediate accounting
Akuntansi (Universitas Padjadjaran)
Studocu is not sponsored or endorsed by any college or university
Downloaded by john gatheca ()
, lOMoARcPSD|28964921
CHAPTER 12
INTANGIBLE ASSETS
CHAPTER LEARNING OBJECTIVES
1. Describe the characteristics of intangible assets.
2. Identify the costs to include in the initial valuation of intangible assets.
3. Explain the procedure for amortizing intangible assets.
4. Describe the types of intangible assets.
5. Explain the accounting issues for recording goodwill.
6. Explain the accounting issues related to intangible asset impairments.
7. Identify the conceptual issues related to research and development costs.
8. Describe the accounting for research and development and similar costs.
9. Indicate the presentation of intangible assets and related items.
Downloaded by john gatheca ()
, lOMoARcPSD|28964921
12 - 2 Test Bank for Intermediate Accounting, IFRS Edition, 2e
TRUE-FALSE—Conceptual
1. Intangible assets derive their value from the right (claim) to receive cash in the future.
f
2. All research phase and development phase costs are expensed as incurred.
f
3. Research phase costs are capitalized as an intangible asset once the project has
economic viability.
f
4. Companies are required to assess the estimated useful life and salvage value of
intangible assets at least annually.
t
5. Impairment testing is conducted annually for both limited–life and indefinite-life intangible
assets.
f
6. Amortization of limited-life intangible assets should not be impacted by expected residual
values.
f
7. Some intangible assets are not required to be amortized every year.
t
8. Limited-life intangibles are amortized by systematic charges to expense over their useful
life.
t
9. The cost of acquiring a customer list from another company is recorded as an intangible
asset.
t
10. The cost of purchased patents should be amortized over the remaining legal life of the
patent.
f
11. If a new patent is acquired through modification of an existing patent, the remaining book
value of the original patent may be amortized over the life of the new patent.
t
12. In a business combination, a company assigns the cost, where possible, to the identifiable
tangible and intangible assets, with the remainder recorded as goodwill.
t
13. Goodwill is considered a master valuation account because it measures the value of
specifically identifiable intangible assets.
f
14. Internally generated goodwill should not be capitalized in the accounts.
t
15. Internally generated goodwill associated with a business may be recorded as an asset
when a firm offer to purchase that business unit has been received.
f
16. All intangibles are subject to periodic consideration of impairment with corresponding
potential write-downs.
t
17. If the recoverable amount of an indefinite-life intangible other than goodwill is less than its
carrying value, an impairment loss must be recognized.
t
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, lOMoARcPSD|28964921
Intangible Assets 12 - 3
18. A cash-generating unit is the smallest identifiable group of assets in a business that can
generate cash flow independently of the cash flows from the business’s other assets.
t
19. The impairment test for goodwill is conducted based on the cash-generating unit to which
the goodwill has been assigned.
t
20. Recoveries of impairments for intangible long-lived assets are reported in "other income
and expense" on the income statement.
t
21. A recovery of impairment for an intangible long-lived asset is limited to the carrying value
that would have been reported had the impairment not occurred.
t
22. After an impairment loss is recorded for a limited-life intangible asset, the recoverable
amount becomes the basis for the impaired asset and is used to calculate amortization in
future periods.
t
23. After an impairment loss is recorded for goodwill, the recoverable amount becomes the
basis for the impaired asset and is used to calculate amortization in future periods.
f
24. Accounting for impairments for limited-life intangible assets follows the same rules used to
account for impairments of plant and equipment.
t
25. IFRS permits reversals of impairment losses for all limited and indefinite-life intangible
assets.
f
26. Periodic alterations to existing products are an example of research and development
costs.
f
27. Research and development costs that result in patents may be capitalized to the extent of
the fair value of the patent.
28. IFRS requires that start-up costs and initial operating losses during the early years be
capitalized.
29. Research and development costs are recorded as an intangible asset if it is felt they will
provide economic benefits in future years.
30. Contra accounts must be reported for intangible assets in a manner similar to the
reporting of property, plant, and equipment.
True False Answers—Conceptual
Item Ans. Item Ans. Item Ans. Item Ans. Item Ans. Item Ans.
1. F 6. F 11. T 16. T 21. T 26. F
2. F 7. T 12. T 17. T 22. T 27. F
3. F 8. T 13. F 18. T 23. F 28. F
4. T 9. T 14. T 19. T 24. T 29. F
5. F 10. F 15. F 20. T 25. F 30. F
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