Intangible Assets
TRUE-FALSE—Conceptual
1. Intangible assets derive their value from the right (claim) to receive cash in the future.
2. All research phase and development phase costs are expensed as incurred.
3. Research phase costs are capitalized as an intangible asset once economic viability.
4. Companies are required to assess the estimated useful life and salvage value of intangible assets at least annually.
5. Impairment testing is conducted annually for both limited–life and indefinite-life intangible assets.
6. Amortization of limited-life intangible assets should not be impacted by expected residual values.
7. Some intangible assets are not required to be amortized every year.
8. Limited-life intangibles are amortized by systematic charges to expense over their useful life.
9. The cost of acquiring a customer list from another company is recorded as an intangible asset.
10. The cost of purchased patents should be amortized over the remaining legal life of the patent.
11. If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent may be amortized over the life of the new patent.
12. In a business combination, a company assigns the cost, where possible, to the identifiable tangible and intangible assets, with the remainder recorded as goodwill.
13. Goodwill is considered a master valuation account because it measures the value of specifically identifiable intangible assets.
14. Internally generated goodwill should not be capitalized in the accounts.
15. Internally generated goodwill associated with a business may be recorded as an asset when a firm offer to purchase that business unit has been received.
16. All intangibles are subject to periodic consideration of impairment with corresponding potential write-downs.
17. If the recoverable amount of an indefinite-life intangible other than goodwill is less than its carrying value, an
1. Intangible assets derive their value from the right (claim) to receive cash in the future.
2. All research phase and development phase costs are expensed as incurred.
3. Research phase costs are capitalized as an intangible asset once economic viability.
4. Companies are required to assess the estimated useful life and salvage value of intangible assets at least annually.
5. Impairment testing is conducted annually for both limited–life and indefinite-life intangible assets.
6. Amortization of limited-life intangible assets should not be impacted by expected residual values.
7. Some intangible assets are not required to be amortized every year.
8. Limited-life intangibles are amortized by systematic charges to expense over their useful life.
9. The cost of acquiring a customer list from another company is recorded as an intangible asset.
10. The cost of purchased patents should be amortized over the remaining legal life of the patent.
11. If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent may be amortized over the life of the new patent.
12. In a business combination, a company assigns the cost, where possible, to the identifiable tangible and intangible assets, with the remainder recorded as goodwill.
13. Goodwill is considered a master valuation account because it measures the value of specifically identifiable intangible assets.
14. Internally generated goodwill should not be capitalized in the accounts.
15. Internally generated goodwill associated with a business may be recorded as an asset when a firm offer to purchase that business unit has been received.
16. All intangibles are subject to periodic consideration of impairment with corresponding potential write-downs.
17. If the recoverable amount of an indefinite-life intangible other than goodwill is less than its carrying value, an