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Review Ch 12 ACCT 373 - 3 Cfirafifie E 5““...

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Unformatted text preview: 3 . « Cfirafifie E 5““ Wr’igiee, inc. went to court this year and successfully defended its patent from infringes ment by a competitor. The cost of this defense should be charged to a. patents and amortized over the legal life of the patent. b. legal fees and amortized over 5 years or less 0 expenses of the period. @atents and amortized over the remaining useful life of the patent Goodwill a. generated internally should not be capitalized unless it is measured by an individual independent of the enterprise involved. b. is easily computed by assigning a value to the individual attributes that comprise its fl existence. represents a unique asset in that its value can be identified only with the business as a whole. d. exists in any company that has earnings that differ from those of a competitor A loss on impairment of an intangible asset is the difference between the asset’s a. carrying amount and the expected future net cash flows. carrying amount and its fair value . fair value and the expected future net cash flows d. book value and its fair value Weaver Boxing Company needs to determine if its indefinite-life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. The impairment testis) to be used is (are) Recoverability Test Fair Value Test a. Yes Yes . Yes No c No 'Yes . No No Rich Corporation purchased a limited-life intangible asset for $180,000 on May 1, 2008. it has a useful life of 10 years. What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2008? a" $ '0'” {tfilaoee/xp\ l/ 95:45 ‘7' gamut.) - b. $36,000 C. $48,000 d. $54,000 ELO Corporation purchased a patent for $180,000 on September 1, 2006. it had a useful amount should be reported for patent amortization expense for 2008‘? @323’583 900i? I‘d/0,0023 7° r0 :2 2‘6,an 'X V3 1 £22300 0. $37,600: 52007 (660.000 1‘ r0 :. 2%.00 a“) /§”,ac9 O . 31,200. M. «2 «~23 d 5 My 3‘ 7' w HS 0190‘?) ~ pk‘lflkffiifi ; l5 @000 “‘r’ L! LjiOQQ rm‘mimM-mcrwr-ntl“ 22 2:2 232%) g: 22’ :2 unset) , , 7, Blue Sky Company’s 12/31/08 balance sheet reports assets of $5,000,000 and liabilities of $2,000,000, All of Blue Sky’s assets’ book values approximate their fair“ value, except for land, which has a fair value that is $300,000 greater than its book value, On 12/31/08, Horace Wimp Corporation paid $5,100,000 to acquire Blue Sky, What amount of goodwill should Horace Wimp record as a result of this purchase? ' a' $ ‘0- C 00 co $1 917' N)“ o .0630 :3 3,300,020 ,0>$100,000 5’0 ’ D 30 1X3“) ‘00 0‘1 7 . $1,800,000 , , fl, , ,_ , ,. _, , ~ :7' .- (gf $2,100,000 5,100,000 3,751,303,000 .2. i, “tit-#115990) 8, Distributor Company purchases Supplier Company for $800,000 cash on January 1, 2007. The book value of Supplier Company’s net assets, as reflected on its December 31, 2006 balance sheet is $620,000,. An analysis by Distributor on December 31, 2006 indicates that the fair value of Supplier’s tangible assets exceeded the book value by $60,000, and the fair value of identifiable intangible assets exceeded book value by $45,000, How much goodwill should be recognized by Distributor Company when recording the purchase of Supplier Company? a.. $ -0— 800,030 '4» 55,500 11-- 115101053 :- 735,976.30 b. $100,000 ”€320,000 eoflimg ‘ 7310,0130 ~ 7:1” @11th . 5,000 9, Twilight Corporation acquired End-of-the-World Products on January 1, 2008 for $2,000,000, and recorded goodwill of $375,000 as a result of that purchase. At December 31, 2008, the End—of—the-World Products Division had a fair value of $1,700,000, The net identifiable assets of the Division (excluding goodwill) had a fair value of $1,450,000 at that time. What amount of loss on impairment of goodwill should Twilight record in 2008‘? / c m-m' A“! W fl ' w Ci} -0_ 317 ODyOQ Q ~— 11 Li $0,: 33531:.) :4 a; s {A} Lin.) 0 “(WM $ f“ 25,000 _. 175,000 375,000 weasel-,3 “1:: 07—51-063 0 d. $300,000 10 Martin inc. incurred the following costs during the year ended December 31, 2007: ,. Laboratory research aimed at discovery of new knowledge $180,000 1/ Costs of testing prototype and design modifications 45,000 V Quality control during commercial production, including routine testing of products 270,000 Construction of research facilities having an estimated useful life of 6 years but no alternative future use 360,000 1/ The total amount to be classified and expensed as research and development in 2007 is a $555,000.. , $855,000,. _ 10 $585,000., 0' L80"? 285 000,. ‘l g $ ' a s ’5 82:) fl. #1. 656" 5 ...
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