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57 Cards in this Set
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c. it is either separable or it arises from contractual and other legal right |
An intangible asset is identifiable when a. it is separable b. it arises from contractual and other legal right. c. it is either separable or it arises from contractual and other legal right d. it is neither separable nor it arises from contractual and other legal right |
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d. all of these statements are true |
which statement is true in relation to control by the entity of the intangible asset? a. the capacity of the entity to control the economic benefits from an intangible asset would normally stem from legal rights that are enforceable in a court of law. b. the skill of employees arising out of the benefits of training costs cannot be recognized as intangible asset. c. market share and customer loyalty cannot normally be recognized as an intangible asset because an entity cannot control the action of customers. d. all of these statements are true. |
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d. The item is nonmonetary, identifiable and lacks physical substance. |
which condition must be met for an item to be recognized as an intangible asset other than goodwill? a. the fair value can be measured reliably. b. the item is a part of an activity aimed at gaining new scientific or technical knowledge. c. The item is expected to be used in the production or supply of goods or services d. The item is nonmonetary, identifiable and lacks physical substance. |
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d. it is probable that future economic benefits attributable to the asset will flow to the entity and the cost of the intangible asset can be measured reliably. |
An intangible asset shall be recognized if a. it is probable that future economic benefits attributable to the asset will flow to the entity. b. The cost of the intangible asset can be measured reliably. c. it is possible that future economic benefits attributable to the asset will flow to the entity and the cost of the intangible asset can be measured reliably. d. it is probable that future economic benefits attributable to the asset will flow to the entity and the cost of the intangible asset can be measured reliably. |
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d. directly attributable cost of preparing the asset for the intended use. |
The cost of a separately acquired intangible asset comprises the purchase price and a. cost of introducing a new product or service b. cost of conducting a business in a new location c. administration and other general overhead cost d. directly attributable cost of preparing the asset for the intended use. |
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d. initial operating loss |
directly attributable costs of preparing the intangible asset for the intended use include all of the following, except a. cost of employee benefit arising directly from bringing the asset to the working condition. b. professional fee arising directly from bringing the asset to the working condition c. cost of testing whether the asset is functioning properly d. initial operating loss |
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d. all of these statements are true. |
which statement is true in relation to internally generated intangible asset? a. internally generated brand, masthead, publishing title, and customer list shall not be recognized as an intangible asset. b. the cost of internally generated intangible asset comprises all directly attributable costs necessary to produce and prepare the asset for the intended use. c. internally generated goodwill shall not be recognized as an intangible asset. d. all of these statements are true. |
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d. expenditure on training staff to operate the asset. |
the cost of an internally generated asset includes all of the following, except a. cost of materials and services used in generating the intangible asset b. compensation costs of personnel directly engaged in generating the asset c. fee to register a legal right d. expenditure on training staff to operate the asset. |
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c. cost model or revaluation model |
after initial recognition, an intangible asset shall be measured using a. cost model b. revaluation model c. cost model or revaluation model d. cost model or fair value model |
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b. an active market exists for the intangible asset |
an entity that acquired an intangible asset may use the revaluation model for subsequent measurement only when a. the useful life of the intangible asset can be reliably determined. b. an active market exists for the intangible asset c. the cost of the intangible asset can be measured reliably d. the intangible asset is a monetary asset |
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d. all of these statements are true |
which statement is true concerning amortization and impairment of intangible asset a. intangible assets with finite useful life are amortized over the useful life b. intangible assets with finite useful life are tested for impairment at the end of reporting period when there is an indication of impairment. c. intangible assets with indefinite useful life are not amortized but are tested for impairment at least annually. d. all of these statements are true |
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a. there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows to the entity |
an intangible asset is regarded as having an indefinite useful life when a. there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows to the entity b. there is a foreseeable limit to the period over which the asset is expected to generate net cash inflows to the entity c. the useful life of the intangible asset arises from contractual right d. the useful life of the intangible asset arises from legal rights. |
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a. the straight line method, unless the pattern of the economic benefits can be determined reliably |
what is the method of amortizing intangible asset? a. the straight line method, unless the pattern of the economic benefits can be determined reliably b. the double declining balance in all circumstances c. a subjective amount of periodic amortization d. the straight line method in all circumstances |
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c. when there is a commitment by a third party to purchase the asset at the end of useful life or there is an active market for the asset and it is probable that such market will exist at the end of useful life. |
The residual value of an intangible asset with a finite useful life shall be assumed zero, except a. when there is a commitment by a third party to purchase the asset at the end of the useful life b. when there is an active market for the asset c. when there is a commitment by a third party to purchase the asset at the end of useful life or there is an active market for the asset and it is probable that such market will exist at the end of useful life. d. there are no exceptions |
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a. residual value |
one factor that is not considered in determining the useful life of an intangible asset is a. residual value b. provision for renewal or extension c. legal life d. expected action of competitors |
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d. the amortization method |
Factors in determining the useful life of an intangible asset include all of the following, except a. the expected use of the asset b. any legal or contractual provision c. any provision for renewal or extension of the legal life d. the amortization method |
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intangible asset |
is simply defined as an identifiable nonmonetary asset without physical substance |
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• Identifiability • Control • Future economic benefits |
3 essential criteria in the definition of an intangible asset, namely: |
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identifiable |
the definition of an intangible asset requires that an intangible asset must be ________ in order to distinguish it clearly from goodwill. |
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• it is separable • it arises from contractual or other legal rights |
An asset is identifiable when: |
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Separable |
this means that the asset is capable of being separated from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related asset or liability. |
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Control |
is the power of the entity to obtain the future economic benefits flowing from the intangible asset and restrict the access of others to those benefits. |
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amortization amortizable amount |
is the systematic allocation of the amortizable amount of an intangible asset over the useful life. is the cost of the intangible asset less residual value. |
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research research activity |
is original and planned investigation undertaken with the prospect of gaining scientific or technical knowledge and understanding. is undertaken to discover new knowledge that will be useful in developing new product. |
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Development development activity |
is the application of research findings or other knowledge to a plan or design for the production of new or substantially improved material, device, product, process, system or service, prior to the commencement of commercial production. involves application of research findings to develop a new product. |
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d. notebook computer |
which does not qualify as an intangible asset? a. computer software b. registered patent c. copyright d. notebook computer |
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d. legal cost paid to lawyers to register a patent. |
which of the following would qualify as an intangible asset? a. advertising and promotion b. tuition fee paid to employees who decide to enroll in an M.B.A program while working with the entity. c. operating loss during the initial stage of the project d. legal cost paid to lawyers to register a patent. |
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d. it is probable that future economic benefits will arise from use and the cost can be measured reliably. |
the recognition criteria for an intangible asset include which of the following conditions? a. the intangible asset must be measured at cost b. the cost can be measured reliably c. it is probable that future economic benefits will arise from use d. it is probable that future economic benefits will arise from use and the cost can be measured reliably. |
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c. initial cost |
which is not a consideration in determining the useful life of an intangible asset? a. legal, regulatory or contractual provision b. provision for renewal or extension c. initial cost d. obsolescence |
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c. it is available for the intended use |
amortization of an intangible asset with a finite useful life shall commence when a. it is first recognized as an asset b. it is probable that it will generate economic benefit c. it is available for the intended use d. the cost can be identified with reasonable certainty. |
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c. as a separate line item |
intangible assets are reported a. with an accumulated amortization account b. under property, plant and equipment c. as a separate line item d. all of these are allowed. |
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c. specifically identifiable and goodwill type |
intangible assets are classified as a. amortizable and unamortizable b. limited life and indefinite life c. specifically identifiable and goodwill type d. legally restricted and goodwill type |
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b. annually |
intangible assets with indefinite useful life are tested for impairment a. quarterly b. annually c. biannually d. there is no definite guideline for impairment |
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d. useful life |
the major problem for an intangible asset is determining a. fair value b. separability c. residual value d. useful life |
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a. accounted for like any other operating loss |
operating loss incurred during the start-up years of a new entity should be a. accounted for like any other operating loss b. written off directly against retained earnings c. capitalized and amortized over five years d. capitalized as an intangible asset and amortized over twenty years. |
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d. expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future use or unless contractually reimbursable |
how should research and development costs be accounted for? a. capitalized when incurred and amortized over the useful life. b. expensed in the period incurred c. either capitalized or expensed when incurred depending upon the materiality d. expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future use or unless contractually reimbursable |
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b. periodic alteration to existing production line |
which of the following would be considered research and development? a. routine effort to refine an exiting product b. periodic alteration to existing production line c. marketing research to promote a new product d. construction of prototype |
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d. cost of testing prototype before economic feasibility has been demonstrated. |
which of the following costs should not be capitalized? a. acquisition cost of equipment to be used on current and future research project b. engineering cost incurred to advance the product to the full production stage c. cost incurred to file for patent d. cost of testing prototype before economic feasibility has been demonstrated. |
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c. cost of marketing research for a new product |
which of the following costs should be excluded from research and development expense? a. modification of the design of a product b. acquisition of research and development equipment for use on a current project only c. cost of marketing research for a new product d. engineering activity required to advance the design of a product to the manufacturing stage. |
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a. adaptation of an existing capability to a particular requirement or customer need |
which of the following should not be considered research and development activity? a. adaptation of an existing capability to a particular requirement or customer need b. application of research finding or other knowledge to a plan for a new product c. laboratory research aimed at discovery of new knowledge d. conceptual formulation and design of possible product alternative |
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d. design, construction and testing of preproduction prototype and model. |
research activities include all of the following, except a. search for application of research findings or other knowledge b. search for product or process alternative c. formulation and design of the possible product or process alternative d. design, construction and testing of preproduction prototype and model. |
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d. laboratory activities aimed at obtaining new knowledge |
development activities include all of the following, except a. design of tools, jigs, molds and dies involving new technology b. design, construction and operation of a pilot plant that is not of a scale economically feasible for commercial production c. design, construction and testing of a chosen alternative for a new or improved product or process d. laboratory activities aimed at obtaining new knowledge |
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c. the entity can be reliably identify the research costs incurred to bring the project to economic feasibility |
which of the following is not one of the criteria which must be met before development costs can be capitalized? a. the entity has a sufficient financial resources to complete the project. b. the entity intends to complete the project and either use or sell the intangible asset c. the entity can be reliably identify the research costs incurred to bring the project to economic feasibility d. the project has achieved technical feasibility |
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b. engineering cost incurred to advance the product to the full production stage |
which of the following costs should be capitalized? a. acquisition cost of equipment to be used on current research project only b. engineering cost incurred to advance the product to the full production stage c. cost of research to determine whether a market for the product exists d. salaries of research staff. |
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c. development cost may be capitalized as an intangible |
which statement is true about development cost? a. development cost must be expensed b. development cost is always deferred and expensed against future revenue c. development cost may be capitalized as an intangible asset in very restrictive situation d. development cost is recorded as component of other comprehensive income. |
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c. the product being developed should have already been put into commercial production |
which statement in relation to research and development is incorrect? a. expenditure during the research phase of a project cannot be capitalized as an intangible asset b. expenditure during the development phase of a project may sometimes be capitalized as an intangible asset c. the product being developed should have already been put into commercial production d. development involves the application of research finding |
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b. costs incurred during development phase can be capitalized if criteria such as technical feasibility of the project being established are met |
a dot-com entity has recently completed a highly publicized research and development project. which statement is the most accurate? a. cost incurred during the research phase can be capitalized b. costs incurred during development phase can be capitalized if criteria such as technical feasibility of the project being established are met c. training costs of technicians used in research can be capitalized d. design of jigs, and tools would qualify as research activities |
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d. immediate recognition as an expense |
which principle best describes the current method of accounting for research and development cost? a. associating cause and effect b. systematic and rational allocation c. income tax minimization d. immediate recognition as an expense |
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a. design, construction and testing of preproduction prototype or model |
a research and development activity for which the cost would be expensed as incurred is a. design, construction and testing of preproduction prototype or model b. quality control during commercial production c. periodic design changes to existing product d. adaptation of an existing capability to a particular requirement or customer need |
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b. depreciation deducted as part of research and development expense |
if an entity construct a laboratory building to be used as a research and development facility, the cost of the laboratory building is matched against earnings as a. research and development expense in the period of construction b. depreciation deducted as part of research and development expense c. depreciation or immediate writeoff depending on policy d. an expense at such time as productive research has been obtained from the facility. |
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b. development or improvement of technique and process |
which is a research and development cost? a. research and development performed under contract for others b. development or improvement of technique and process c. offshore oil exploration that id the primary activity of an entity d. market research related to a major product of the entity |
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a. quality control during commercial production |
which is an example of an activity that would be excluded from research and development costs? a. quality control during commercial production b. laboratory research aimed at discovery of new knowledge c. design, construction and testing of preproduction prototype and model d. testing in search for product or process alternative |
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c. testing in search for product or process alternative |
an activity that would be expensed currently as research and development is a. engineering follow-through in an early phase of commercial production b. legal work in connection with patent application and licensing of patent c. testing in search for product or process alternative d. adaption of an existing capability to a particular requirement or customer need as part of continuing commercial activity |
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a. total cost of the equipment |
at the beginning of current year, an entity purchased equipment for use in developing a new product. the entity used the straight line depreciation method. the equipment could provide benefits over a 10-year period. however, the new product development is expected to take five years and the equipment can be used only for this project. the expense for the current year in relation to the equipment equals a. total cost of the equipment b. one-fifth of the cost of the equipment c. one-tenth of the cost of the equipment d. zero |
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b. cost of testing equipment that will also be used in another research and development project |
which research and development costs should be capitalized and amortized over the current and future periods? a. labor and material costs incurred in constructing a prototype or model b. cost of testing equipment that will also be used in another research and development project c. administrative salaries allocated to research d. research findings purchased from another entity to aid a particular research project currently in process. |
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d. engineering activity required to advance the design of a product to the manufacturing stage. |
which of the following costs should be excluded from research and development expense? a. modification of the design of a product b. acquisition of research and development equipment for use on a current project only c. cost of marketing research for a new product d. engineering activity required to advance the design of a product to the manufacturing stage. |
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b. to charge research and development expense when incurred until technological feasibility has been established for the product |
the proper accounting for costs incurred in creating computer software is a. to capitalize all costs until the software is sold. b. to charge research and development expense when incurred until technological feasibility has been established for the product c. to charge research and development expense only if the computer software has alternative future use d. to capitalized all costs incurred until a detailed program design or working model is created |
