Test Paper
1. A change in the amortization rate for an intangible asset should be accounted for as a
a. change in accounting principle.
b. change in reporting entity.
c. correction of an error.
d. change in accounting estimate d 2. Wriglee, Inc. went to court this year and successfully defended the brand name of its product, "Sweet Gum," from infringement 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.
c. expenses of the period.
d. trademarks and amortized over a period not to exceed 40 years. d 3. The intangible asset goodwill may be
a. capitalized only when purchased.
b. capitalized either when purchased or created internally.
c. capitalized only when created internally.
d. written off directly to retained earnings.
A
4. Goodwill was purchased when a business was acquired. When the goodwill is amortized, the credit is usually made to
a. the Goodwill account.
b. an Accumulated Amortization account.
c. a Deferred Credit account.
d. a stockholders' equity account. a 5. Which of the following principles BEST describes the current method of accounting for research and development costs?
a. Associating cause and effect
b. Systematic and rational allocation
c. Income tax minimization
d. Immediate recognition as an expense d 6. How should research and development costs be accounted for, according to a Financial Accounting Standards Board Statement?
a. Must be capitalized when incurred and then amortized over their estimated useful lives.
b. Must be expensed in the period incurred.
c. May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved.
d. Must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable. d 7. Which of the following costs should be EXCLUDED from research and
a. change in accounting principle.
b. change in reporting entity.
c. correction of an error.
d. change in accounting estimate d 2. Wriglee, Inc. went to court this year and successfully defended the brand name of its product, "Sweet Gum," from infringement 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.
c. expenses of the period.
d. trademarks and amortized over a period not to exceed 40 years. d 3. The intangible asset goodwill may be
a. capitalized only when purchased.
b. capitalized either when purchased or created internally.
c. capitalized only when created internally.
d. written off directly to retained earnings.
A
4. Goodwill was purchased when a business was acquired. When the goodwill is amortized, the credit is usually made to
a. the Goodwill account.
b. an Accumulated Amortization account.
c. a Deferred Credit account.
d. a stockholders' equity account. a 5. Which of the following principles BEST describes the current method of accounting for research and development costs?
a. Associating cause and effect
b. Systematic and rational allocation
c. Income tax minimization
d. Immediate recognition as an expense d 6. How should research and development costs be accounted for, according to a Financial Accounting Standards Board Statement?
a. Must be capitalized when incurred and then amortized over their estimated useful lives.
b. Must be expensed in the period incurred.
c. May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved.
d. Must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable. d 7. Which of the following costs should be EXCLUDED from research and