AC 551 Wk 1 Quiz
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AC 551 Wk 1 Quiz

Course: ACCT 551, Spring 2012

School: DeVry Alpharetta

Word Count: 339

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1. Question: (TCO C) Intangible assets are reported on the balance sheet StudentAnswer: with an accumulated depreciation account. in the property, plant, and equipment section. separately from other assets. None of the above InstructorExplanation: PointsReceived: Proper classification under U.S. GAAP. Chapter 12 4of4 Comments: 2. Question: (TCO C) Which of the following is often reported as an...

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C) 1. Question: (TCO Intangible assets are reported on the balance sheet StudentAnswer: with an accumulated depreciation account. in the property, plant, and equipment section. separately from other assets. None of the above InstructorExplanation: PointsReceived: Proper classification under U.S. GAAP. Chapter 12 4of4 Comments: 2. Question: (TCO C) Which of the following is often reported as an extraordinary item? StudentAnswer: Amortization expense Impairment losses for intangible assets Research and development costs None of the above InstructorExplanation: PointsReceived: Comments: 4of4 None of the items qualify as extraordinary items, which are rare. Amortization, impairment losses, and research and development are normal transactions in an operating business. Chapter 12 3. Question: (TCO C) Alonzo Co. acquires three patents from Shaq Corp. for a total of $360,000. The patents were carried on Shaqs books as follows: Patent AA, $5,000; Patent BB, $2,000; and Patent CC, $3,000. When Alonzo acquired the patents, their fair market values were: Patent AA, $20,000; Patent BB, $240,000; and Patent CC, $60,000. At what amount should Alonzo record Patent BB? StudentAnswer: $120,000 $240,000 $2,000 $270,000 InstructorExplanation: PointsReceived: $360,000 X ($240,000 / $320,000) = $270,000. Chapter C) 12 4of4 Comments: 4. Question: (TCO Day Company purchased a patent on January 1, 2010 for $360,000. The patent had a remaining useful life of 10 years at that date. In January of 2011, Day successfully defends the patent at a cost of $162,000, extending the life of the patent to 12/31/22. What amount of amortization expense would Kerr record in 2011? StudentAnswer: $36,000 $40,500 $43,500 $54,000 InstructorExplanation: [($360,000 $36,000) + $162,000] / 12 = $40,500. Chapter 12 PointsReceived: 4of4 Comments: 5. Question: (TCO C) Howard Company acquired a patent on a coal extraction technique on January 1, 2010 for $8,000,000. It was expected to have a 20-year life and no residual value. Howard uses the straight-line amortization for all patents. On December 31, 2011, the future cash flows from the patent were expected to be $1,200,000 per year for the next 12 years. The present value of these cash flows, discounted at Howards market interest rate, is $4,300,000. At what amount should the patent be carried on the December 31, 2011 balance sheet? StudentAnswer: $8,000,000 $7,200,000 $6,600,000 $6,000,000 InstructorExplanation: PointsReceived: Type $8,000,000 [$8,000,000 / 20) X 2] = $7,200,000. Chapter 12 4of4 Comments: *Timesaredisplayedin(GMT07:00)MountainTime(US&Canada)
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