Question1: Operating losses incurred during the start-up years of a new business should be;
[A] Capitalized as a deferred charge and amortized over five years.
[B] Capitalized as an intangible asset and amortized over a period not to exceed 20 years
[C] Accounted for and reported like the operating losses of any other business
[D] Written off directly against retained earnings.
Question2: Which of the following intangibles should not be amortized?
[A] Perpetual franchises
[B] Copyrights
[C] Customer lists
[D] All of these intangible assets should be amortized
Question3: On January 2, 2007, Klein Corporation bought a trademark from Royce, Company for $300,000. An independent research company estimated that the remaining useful life of the trademark was 10 years. Its unamortized cost on Royce’s books was $240,000. In Klein’s 2007 income statement, what amount should be reported as amortization expense?
[A] $15,000
[B] $12,000
[C] $30,000
[D] $24,000
Question4: Purchased goodwill should;
[A] Be written off by systematic charges as a regular operating expense over the period benefited
[B] Be written off as soon as possible against retained earnings
[C] Be written off as soon as possible as an extraordinary item
[D] Not be amortized
Question5: Riser company was granted a patent on a product on January 1, 1998. To protect its patent, the corporation purchased on January 1, 2007 a patent on a competing product which was originally issued on January 10, 2003. Because of its unique plant, Riser company does not feel the competing patent can be used in produced a product. The cost of the competing patent should be
[A] Amortized over a maximum period of 11 years.
[B] Amortized over a maximum period of 20 years.
[C] Amortized over a maximum period of 16 years.
[D] Expensed in 2007.
Question6: A loss on impairment of an intangible asset is the difference between the assets;
[A] Fair value and the expected future net cash flows.
[B] Book value and its fair value.
[B] Carrying amount and the expected future net cash flows.
[C] Carrying amount and its fair value.