Managemwnt

1. | Question : | (TCO C) Intangible assets are reported on the balance sheet |

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| Student Answer: | | with an accumulated depreciation account. |

| | | in the property, plant, and equipment section. |

| | | separately from other assets. |

| | | None of the above

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| Instructor Explanation: | Proper classification under U.S. GAAP. Chapter 12 |

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| Points Received: | 4 of 4 |

| Comments: | |

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2. | Question : | (TCO C) Which of the following is often reported as an extraordinary item? |

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| Student Answer: | | Amortization expense |

| | | Impairment losses for intangible assets |

| | | Research and development costs |

| | | None of the above

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| Instructor Explanation: | None of the items qualify as extraordinary items, which are rare. Amortization, impairment losses, and research and development are normal transactions in an operating business. Chapter 12 |

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| Points Received: | 4 of 4 |

| Comments: | |

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3. | Question : | (TCO C) Alonzo Co. acquires three patents from Shaq Corp. for a total of $360,000. The patents were carried on Shaq’s books as follows: Patent AA, $5,000; Patent BB, $2,000; and Patent CC, $3,000. When Alonzo acquired the patents, their fair market values were: Patent AA, $20,000; Patent BB, $240,000; and Patent CC, $60,000. At what amount should Alonzo record Patent BB? |

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| Student Answer: | | $120,000 |

| | | $240,000 |

| | | $2,000 |

| | | $270,000

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| Instructor Explanation: | $360,000 X ($240,000 / $320,000) = $270,000. Chapter 12 |

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| Points Received: | 4 of 4 |

| Comments: | |

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4. | Question : | (TCO C) Day Company purchased a patent on January 1, 2010 for $360,000. The patent had a remaining useful life of 10 years at that date. In January of 2011, Day successfully defends the patent at a cost of $162,000, extending the life of the patent to 12/31/22. What...