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Chapter 32 - Multiple Choice

This document contains 15 multiple choice questions testing knowledge of accounting for different types of intangible assets including patents, trademarks, copyrights and franchises. The questions cover topics such as the categories intangible assets fall into, their amortization periods, treatment of legal and other costs, and identifying correct and incorrect statements about intangible asset accounting.

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LorraineMartin
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4K views

Chapter 32 - Multiple Choice

This document contains 15 multiple choice questions testing knowledge of accounting for different types of intangible assets including patents, trademarks, copyrights and franchises. The questions cover topics such as the categories intangible assets fall into, their amortization periods, treatment of legal and other costs, and identifying correct and incorrect statements about intangible asset accounting.

Uploaded by

LorraineMartin
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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MULTIPLE CHOICE

1. Patent is an example of which category of intangible asset?


a. Market-related
b. Customer-related
c. Artistic-related
d. Technology-based
2. A patent should be amortized over
a. Twenty years
b. The useful life
c. The useful life or twenty years, whichever is longer
d. The useful life or twenty years, whichever is shorter
3. When a patent is amortized, the credit is usually made to
a. The patent account
b. As accumulated amortization account
c. An accumulated depreciation account
d. An expense account
4. When an entity successfully defended a patent from infringement by a competitor, the
cost of successful litigation should be
a. Amortized over the legal life of the patent
b. Amortized over five years
c. Expensed in the period when incurred
d. Amortized over the remaining useful life of the patent
5. The cost of purchasing right for a product that might otherwise have seriously competed
with the purchaser’s patented product should be
a. Charged off in the current period.
b. Amortized over the legal life of the purchased patent
c. Added to factory overhead
d. Amortized over the remaining useful life of the patent for the product whose
market would have been impaired by competition from the newly patented
product.
6. A trademark is an example of which category of intangible asset?
a. Market-related
b. Customer-related
c. Artistic-related
d. Contract-based
7. Which should not be capitalized as cost of trademark?
a. Cost of successful litigation of the trademark
b. Registration with Intellectual Property Office
c. Design cost
d. Legal fee
8. Which cost associated with a trademark should not be capitalized?
a. Attorney fee
b. Consulting fee
c. Research and development fee
d. Design cost
9. What is the legal life of trademark?
a. 10 years
b. 20 years
c. 10 years and renewable after every 10 years
d. 20 years and renewable after every 20 years.
10. Which statement is incorrect in relation to trademark?
a. A trademark can be regarded as an intangible asset with an indefinite useful life
b. A trademark is an identifiable intangible asset
c. A trademark with indefinite useful life is not amortized but tested for impairment
at least annually
d. A trademark is amortized and tested for impairment whenever there is an
indication of impairment
11. A copyright is an example of which category of intangible asset?
a. Market-related
b. Customer-related
c. Artistic-related
d. Contract-based
12. Franchise is an example of which general category of intangible asset?
a. Market-related
b. Customer-related
c. Artistic-related
d. Contract-based
13. Customer list and order backlog are an example of which general category of intangible
asset?
a. Market-related
b. Customer-related
c. Artistic-related
d. Contract-based
14. Copyright should be amortized over
a. The legal life
b. The life of the creator plus fifty years
c. Twenty years
d. The useful life or legal life, whichever is shorter
15. Which of the following should be expensed as incurred by the franchisee for a franchise
with finite useful life?
a. Amount paid to the franchisor for the franchise
b. Payment to an entity, other than the franchisor, for that entity’s franchise
c. Legal fees paid to obtain the franchise
d. Periodic payments to the franchisor based on the franchisee’s revenue

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