Learning Objective 6-3
1) Which of the following is
NOT
an intangible asset?
A) human resources
B) copyrights
C) patents
D) franchises
2) Which assets are depreciated?
A) intangible assets
B) natural resources
C) property, plant and equipment, except for land
D) long-term investments in marketable stocks and bonds
3) Which assets are depleted?
A) intangible assets
B) natural resources
C) property, plant and equipment, except for land
D) long-term investments in marketable stocks and bonds
4) Which assets are amortized?
A) intangible assets
B) natural resources
C) property, plant and equipment, except for land
D) long-term investments in marketable stocks and bonds
5) A business will have depletion expense only if it has ________.
A) current assets that are consumed during the period
B) property, plant, and equipment that are used in operating activities
C) natural resources like timber and oil
D) intangible assets like copyrights and trademarks
6) Amortization is the ________.
A) allocation of a natural resource’s cost to an expense account as the resource is consumed
B) allocation of an intangible asset’s cost to an expense account over the asset’s estimated useful life
C) allocation of building and equipment cost to an expense account over the assets’ estimated useful lives
D) capitalization of a long-term asset’s cost
7) Which depreciation method is most similar to the method that is used to calculate amortization of intangible assets?
A) straight-line
B) double-declining balance
C) activity
D) capitalization
8) Which of the following assets should be amortized?
A) building
B) patent
C) oil reserves
D) timber
9) On January 1, 2011, Ace Electronics purchased a patent for $2,000,000 cash, which allows Ace the exclusive legal right to manufacture a new microchip for the next 20 years. However, Ace thinks that the useful life of the patent is only 5 years because rapid changes in technology will make the microchip obsolete. For 2011, Ace should report ________.
A) depreciation expense of $100,000
B) amortization expense of $100,000
C) depreciation expense of $400,000
D) amortization expense of $400,000
10) Under U.S. GAAP, research and development costs (R&D) are ________.
A) capitalized and amortized
B) capitalized and depreciated
C) expensed when incurred
D) expensed when the related product is sold