136B_S06_MT

136B_S06_MT - August 23, 2006 Anderson ECON 136B Midterm...

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August 23, 2006 Anderson ECON 136B Midterm Name _________________________ Answer questions #1-25 on your scantron and #26-27 in your blue book. This is a timed exam with 1.25 hours available. 1. If an intangible asset is being amortized over a definite life, the following is true: a. Impairment testing is never required. b. Impairment testing is required whenever there is an event or change in circumstances indicating a possible impairment. c. Impairment testing is required to be performed on an annual basis. d. Impairment testing is required only if the auditor deems it to be necessary. 2. If a definite-life intangible asset has been subject to an event or circumstance indicating possible impairment: a. An undiscounted cash flow analysis should be performed in connection with the first step of impairment testing. b. A discounted cash flow analysis should be performed in connection with the first step of impairment testing. c. If an undiscounted cash flow analysis indicates that the undiscounted cash flows are less than the net book value of the subject asset, then an impairment has been deemed to have occurred. d. Both (a) and (c). 3. Management acquired a business in 2003, resulting in the recordation of $1,000,000 of goodwill. The Company's management continues to monitor the operations of the acquired business separately, however the balance sheet is no longer separately tracked. Which of the following is true regarding the acquired business? a. The acquired business represents a "reporting unit" for purposes of impairment testing. b. The acquired business does not represent a "reporting unit" for purposes of impairment testing. c. The associated goodwill should be written-off as the acquired business does not represent a "reporting unit" d. The associated goodwill can not be measured for impairment. 4. Indefinite lived intangible assets should be tested for impairment: a. At least annually. b. Only if there has been an event or change in circumstance indicating an impairment. c. Only if the undiscounted cash flows are less than net book value. d. Only if the discounted cash flows are less than net book value.
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Midterm--Page 2 5. A definite life intangible should be tested for impairment: a. At least annually. b. Only if there has been an event or change in circumstance indicating an impairment. c. Only if the undiscounted cash flows are less than net book value. d. Only if the discounted cash flows are less than net book value. 6. Which of the following items should be presented as a long-term liability on the balance sheet: a. A debt which was repaid with proceeds from a stock issuance after the date of the balance sheet, but before the financial statements were issued. b.
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136B_S06_MT - August 23, 2006 Anderson ECON 136B Midterm...

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