21. The acquiring company records goodwill equal to the purchase price less the book value of the net assets acquired.
22. We capitalize repairs and maintenance expenditures because they maintain a given level of benefits.
23. If a firm successfully defends an intangible right, it should expense the litigation costs as incurred.
24. If the defense of an intangible right is unsuccessful, then the firm should expense the litigation costs as incurred because they provide no future benefit.
25. Depreciation in accounting is the process of allocating to expense the cost of an asset over its service life.
26. Depreciation in accounting records the decrease in value of an asset.
27. Accumulated Depreciation is a liability account that is increased by credits.
28. Book value is equal to the original cost of the asset minus the current balance in Accumulated Depreciation.
29. The Accumulated Depreciation account allows us to reduce the carrying value of assets through depreciation, while maintaining the original cost of each asset in the accounting records.
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30. The service life of an asset is always equal to the full life of the asset.