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INTANGIBLE ASSETS

11. When a company develops a trademark, the costs directly related to securing it should generally be

capitalized. Which of the following costs associated with a trademark would not be allowed to be capitalized?

a. Attorney fees.

b. Consulting fees.

c. Research and development fees.

d. Design costs.

12. In a business combination, the excess of the cost of the purchase over the fair value of the identifiable net

assets purchased is

a. other assets.

b. indirect costs.

c. goodwill.

d. a bargain purchase.

13. Goodwill may be recorded when

a. it is identified within a company.

b. one company acquires another in a business combination.

c. the fair value of a company's assets exceeds their cost.

d. a company has exceptional customer relations.

14. The reason goodwill is sometimes referred to as a master valuation account is because

a. it represents the purchase price of a business that is about to be sold.

b. it is the difference between the fair value of the net identifiable assets as compared with the

purchase price of the acquired business.

c. the value of a business is computed without consideration of goodwill and then goodwill is added to arrive

at a master valuation.

d. it is the only account in the financial statements that is based on value, all other accounts are recorded

at an amount other than their value.

15. Purchased goodwill from a business combination should:

a. be written off as soon as possible against retained earnings.

b. be written off as soon as possible as an other expense item.

c. be written off by systematic charges as a regular operating expense over the period benefited.

d. recognized as an asset and not be amortized.

16. The intangible asset goodwill may be

a. capitalized only when resulted on a purchase of a business.

b. capitalized either when purchased or created internally.

c. capitalized only when created internally.

d. written off directly to retained earnings.

17. All of the following are true regarding recovery of impairments for intangible assets except

a. After a recovery of impairment has been recognized, the carrying value of the asset reported

on the statement of financial position will be the higher of the fair value less cost to sell or the

value-in-use.

b. No recovery of impairment is allowed for Goodwill.

c. A recovery of impairment will be reported in the "Other income and expense" section of the income

statement.

d. The amount of the recovery is limited to the carrying value of the asset that would have been reported

had no impairment occurred.

18. According to the definition provided in PAS 38 Intangibles, the term "research" means

a. The application of research findings or other knowledge to a plan or design for the production of new or

substantially improved materials, deices, products, processes, systems, or services before the start of

commercial production or use

b. Original and planned investigation undertaken with the prospect of gaining new scientific or

technical knowledge and understanding

c. The use of research findings to create a substantially improved product

d. Using knowledge to materially improve a manufacturing device

19. Which of the following is not a criterion which must be met before development costs can be capitalized?

a. The company has sufficient financial resources to complete the project.

b. The company intends to complete the project and either use or sell the intangible asset.

c. The company can reliably identify the research costs incurred to bring the project to economic

feasibility.

d. The project has achieved technical feasibility

ASAP

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