11) Which intangible asset is NOT amortized?
A) patents
B) trademarks
C) copyrights
D) goodwill
12) Amortization expense is recorded for:
A) intangible assets with an indefinite life.
B) intangible assets with a finite life.
C) goodwill.
D) franchise established with a contract with unlimited extensions.
13) How does the journal entry to amortize a copyright affect the accounting equation?
A) increases assets and stockholders' equity
B) decreases assets and stockholders' equity
C) increases assets and decreases stockholders' equity
D) decreases assets and increases stockholders' equity
14) When an intangible asset is amortized:
A) stockholders' equity decreases.
B) net income decreases.
C) net assets decrease.
D) all of the above.
15) Patents are amortized over a period of:
A) 40 years or the expected useful life, whichever is less.
B) 20 years or the expected useful life, whichever is less.
C) 70 years plus life of inventor, or the expected useful life, whichever is less.
D) 50 years plus life of inventor, or the expected useful life, whichever is less.
16) Which of the following is a CORRECT statement regarding intangible assets?
A) The useful life of a patent can be longer than its legal life.
B) Patents protect computer software programs.
C) Trademarks are rights to reproduce and sell a work of art.
D) Intangible assets with indefinite lives must be checked annually for any loss in value.
17) The entry to record Patent Amortization Expense:
A) increases total assets and decreases total stockholders' equity.
B) decreases total assets and increases total stockholders' equity.
C) decreases both total assets and total stockholders' equity.
D) increases both total assets and total stockholders' equity.
18) If a company has goodwill on its books, then the goodwill:
A) is amortized over 40 years or useful life, whichever is less.
B) is tested for impairment annually.
C) may have been internally created.
D) may be written up to fair value.
19) Merck Pharmaceutical Company has many scientists working in their labs trying to develop a new drug to treat congestive heart failure. Following U.S. Generally Accepted Accounting Principles, the cost of this research and development must be:
A) set up as an intangible asset and not amortized.
B) set up as an intangible asset and amortized over 20 years.
C) set up as an intangible asset and tested for impairment on a yearly basis.
D) expensed as incurred.
20) When comparing U.S. Generally Accepted Accounting Principles and International Financial Reporting Standards, ________ are treated the same way.
A) Research and Development Costs
B) Research Costs
C) Development Costs
D) the calculation of depreciation expenses