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Exam 12: Intangibles

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Question 21

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Which amortization method should be used for intangibles that are amortized?

A) a method based on the expected pattern of benefits to be produced by the asset
B) a method based on an annual review for impairment
C) the straight-line method; all others are inappropriate
D) any method is appropriate

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Question 22

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The Ripkin Corporation was organized and began to operate on January 1, 2014, to manufacture and sell children's clothes. During 2014, the following expenditures were recorded in the company's goodwill account: The above transactions were recorded by an inexperienced data entry clerk. Required: a.Prepare an entry as of December 31, 2014, to reclassify the appropriate items from the goodwill account to appropriate accounts. b.Prepare the adjusting entry or entries required to amortize the intangible assets using the straight-line method. Calculate amortization to the nearest month.

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Question 23

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Ship Publishing signed a contract with an artist to publish his artwork into large format posters to resell. The contract was signed on January 1, 2014, and a payment of $15,000 was made to obtain copyright privileges. Ship sold 15,000 posters each year starting in 2014 at a price of $15. The copyright is expected to be useful for 3 years. Required: Prepare the journal entries for 2014 and 2015.

For financial reporting purposes, GAAP requires organization costs to be

Provide two examples of internally developed goodwill and what distinguishes them from other identifiable intangible assets?

For intangible assets that are amortized what does a company need to disclose on its balance sheet regarding those assets?

The cost of an internally developed unidentifiable intangible is expensed as incurred. Accordingly, which one of the following costs would be expensed in the year it was incurred?

On January 1, 2013, Moose Co. purchased for $360,000 a patent that had been granted two years earlier. On January 1, 2015, legal costs of $64,000 were incurred in a successful defense of the patent. Assuming the maximum period allowable is used for patent amortization, what is Moose's patent amortization expense for 2015?

What are the five basic categories that identifiable intangible assets can be classified?

Consider the following information from a company's records for 2014: Required: a.Compute the amount of R&D costs that should be classified as expenses in determining 2014 net income. b.For any listed item not included in your answer to requirement 1, provide the rationale for not expensing it.

At the date of purchase, materials, equipment, facilities, and intangibles purchased from others that have alternative future uses in research and development should be

Copyright cost is amortized over

The Chambers Company was formed in early 2017. At the time of formation, Chamber spent the following amounts: accounting fees, $4,000; legal fees, $8,000; stock certificate costs, $3,000; initial franchise fee, $10,000; initial lease payment, $5,000; promotional fees, $3,000. Chamber intends to capitalize and amortize intangibles over the maximum allowable period in accordance with generally accepted accounting principles. Based on this strategy, what is Chambers's expense associated with organization costs in 2017?

Debbie acquired a franchise to operate a donut shop from Dollar Donuts, Inc., for $100,000. She incurred an additional $4,000 in legal costs to negotiate the terms with the franchiser. In five years, the franchise contract will be renegotiated. The current contract also states that there will be a $3,000 annual fee plus a two percent charge based on the store's annual revenue, which is expected to average 90,000 per year. The franchise cost that should be capitalized is

Internal use software costs are

Which statement regarding goodwill is true?

A copyright is granted by the federal government giving the owner exclusive rights to sell, publish, and control the artistic product for the life of the creator.

The following items are excluded from research and development costs except

Which of the following relationships between category of intangibles and amortization is false?

In January 2014, the Jennifer Corporation purchased a patent for $231,000 from Travis Company that had a remaining legal life of 14 years. Jennifer estimated that the remaining economic life would be seven years. In January 2018, the company incurred $30,000 in legal costs to defend the patent from an infringement. Jennifer's lawyers were successful, and the remaining years of benefit from the patent were estimated to be six years. The patent amortization expense for 2018 is