Chapter 12—Investments in Noncurrent Operating Assets-AcquisitionMULTIPLE CHOICE
1.Kramer Service Corporation bought a building lot to construct a new corporate office building. An older home on the building lot was razed immediately so that the office building could be constructed. The cost of purchasing the older home should be
a.recorded as part of the cost of the land.b.written off as a loss in the year of purchase.c.written off as an extraordinary item in the year of purchase.Cd.recorded as part of the cost of the new building.ANS:AOBJ:LO 1
2.The term "intangible assets" is used in accounting to denote
3.Which of the following intangible assets does nothave the characteristic of exchangeability?
4.In a business combination, goodwill is defined as the excess of cost over the
5.Goodwill should be recorded in the accounting records only when
a.it is purchased from another company.b.it can be established that a definite benefit or advantage has resulted to a firm from some item such as a good name, capable staff, or reputation.c.it is acquired through the purchase of another business entity.d.a firm reports above normal earnings for five or more consecutive years.OBJ:LO 1510