41.When a company purchases bonds of another company at a premium, amortization of the bond premium
a.increases interest revenue recorded over the life of the bonds
b.decreases interest revenue recorded over the life of the bonds
c.is recorded at the time the bonds are purchased
d.is not recorded until the bonds are sold or mature
42.Wilson Co. purchased bonds issued by Sari Co. The bonds pay interest at a rate of 8% and were purchased to yield a market rate of 10%. As a result, the bonds were purchased at
a.their face value
b.more than their face value
c.less than their face value
d.their maturity value
43.The excess of the purchase price of a company over the fair market value of its net assets is known as
a.surplus
b.amortization
c.goodwill
d.capital
44.The excess of cost over the fair market value of net assets acquired when one company purchases another company should be reported as a(n)
a.fixed asset
b.intangible asset
c.expense of the period in which the acquisition occurs
d.revenue of the period in which the acquisition occurs
45.The Turboprop Boat Company purchased Wooden Oar Company for $60 million in cash. The book value of the net assets of Wooden Oar Company were $40 million at the time of the purchase. The fair market value of the net assets of Wooden Oar Company were estimated to be $50 million at the time of the purchase. As a result, Turboprop Boat Company should record
a.goodwill of $10 million
b.goodwill of $20 million
c.no goodwill because it paid cash for Wooden Oar Company rather than issuing stock
d.no goodwill because the fair market value of Wooden Oar's net assets was equal to the cash paid
46.Gonzo Company purchased 100% of Bean Corporation for $600,000 cash. Book value of Bean's net assets was $500,000 at the time and the fair market value was $580,000. Which of the following will be recorded on Gonzo's books for this event?
a.total assets of Bean Company of $600,000 with goodwill being $100,000
b.total assets of Bean Company of $500,000 with goodwill being $20,000
c.total assets of Bean Company of $580,000 with goodwill being $100,000
d.total assets of Bean Company of $600,000 with goodwill being $20,000
47.Goodwill may be amortized over a period not to exceed
a.over 10 years
b.over 20 years
c.over 30 years
d.only when it is considered impaired
48.When accountants use the term "deferred charge," they are referring to a situation in which a(n)
a.expense has been prepaid but will not be consumed during the current period
b.asset has been utilized but will not be paid for until some future period
c.contingent liability has been identified
d.decision has been made to write off a nonproductive asset but it will not be done until a future period
49.The “using-up” process or utilization of intangible assets is referred to as
a.depreciation
b.depletion
c.research and development
d.amortization
50.Deferred charges are:
a.typically not amortized
b.short-term assets
c.assets prepaid that produce long-term profits
d.long-term assets included with plant assets