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136B_S07_1 - Anderson ECON 136B Exam#1 Name Answer...

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July 16, 2007 Anderson ECON 136B Exam #1 Name _________________________ Answer questions #1-25 on green scantron and #26, 27 & 28 in your blue- book. You may take this exam with you. 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. Indefinite lived intangible assets should be tested for impairment: 3. A definite life intangible should be tested for impairment: 4. An indefinite life intangible asset should be amortized: 5. Costs incurred internally to create intangibles are a. capitalized. b. capitalized if they have an indefinite life. c. expensed as incurred. d. expensed only if they have a limited life.
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Exam #1--Page 2 6. The cost of purchasing patent rights for a product that might otherwise have seriously competed with one of the purchaser's patented products should be 7. Easton Company and Lofton Company were combined in a purchase transaction. Easton was able to acquire Lofton at a bargain price. The sum of the market or appraised values of identifiable assets acquired less the fair value of liabilities assumed exceeded the cost to Easton. After revaluing noncurrent assets to zero, there was still some "negative goodwill." Proper accounting treatment by Easton is to report the amount as
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