Acct 551 Midterm

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Question :

1.

(TCO C) Under current accounting practice, intangible assets are classified as amortizable or unamortizable. limited-life or indefinite-life. specifically identifiable or goodwill-type. legally restricted or goodwill-type.

Student Answer:

Instructor Explanation:

Chapter 12

5 of 5

Points Received: Comments:

2.

Question :

(TCO C) Which of the following intangible assets should not be amortized? Copyrights Customer lists Perpetual franchises All of these intangible assets should be amortized.

Student Answer:

Instructor Explanation:

Chapter 12

0 of 5

Points Received: Comments:

3.

Question : Student Answer:

(TCO C) The intangible asset goodwill may be capitalized only when purchased. capitalized either when purchased or created internally. capitalized only when created internally. written off directly to retained earnings.

Instructor Explanation:

Chapter 12

Points Received: Comments:

5 of 5

4.

Question :

(TCO C) ELO Corporation purchased a patent for $90,000 on September 1, 2008. It had a useful life of ten years. On January 1, 2010, ELO spent $22,000 to successfully defend the patent in a lawsuit. ELO feels that as of that date, the remaining useful life is five years. What amount should be reported for patent amortization expense for 2010? $20,600. $20,000. $18,800. $15,600.

Student Answer:

Instructor Explanation:

Chapter 12. $90,000 – [($90,000 ÷ 10) × 1 1/3] = $78,000. ($78,000 + $22,000) ÷ 5 = $20,000.

5 of 5

Points Received: Comments:

5.

Question :

(TCO C) During 2011, Bond Company purchased the net assets of May Corporation for $1,000,000. On the date of the transaction, May had $300,000 of liabilities. The fair value of May's assets when acquired were as follows:

How should the $500,000 difference between the fair value of the net assets acquired ($1,500,000) and the cost ($1,000,000) be accounted for by Bond?

Student Answer:

The...