1. Which condition must be met for an item to be 5.

An entity that acquired an intangible asset may use the

recognized as an intangible asset other than goodwill? revaluation model for subsequent measurement only
when
a. The fair value can be measured reliably.
a. The useful life of the intangible asset can be reliably
b. The item is part of an activity aimed at gaining new determined.
scientific or technical knowledge.
b. An active market exists for the intangible asset.
c. The item is expected to be used in the production or
supply of goods or services. c. The cost of the intangible asset can be measured reliably.

d. The item is nonmonetary, identifiable and lacks physical d. The intangible asset is a monetary asset
substance.

1. Which does not qualify as an intangible asset?

2. An intangible asset is identifiable when
a. Computer software
a. It is separable.
b. Registered patent
b. It arises from contractual and other legal right.
c. Copyright
c. It is either separable or it arises from contractual and
other legal right. d. Notebook computer

d. It is neither separable nor it arises from contractual and

other legal right. 2. Which of the following would qualify as an intangible
asset?

3. The recognition criteria for an intangible asset include a. Advertising and promotion
which condition? b. Tuition fees paid to emp employees who decide to enroll
a. The intangible asset must be measured at cost. in an M.B.A program while working with the entity

b. The cost can be measured reliably. c. Operating losses during the initial stages of the project d.
Legal costs paid to lawyers to register a patent
c. It is probable that future eocnomic benefit will arise.

d. It is probable that future economic benefit will arise

from use and the cost can be measured reliably. 3. Which is not a consideration in determining the useful
life of an intangible asset?

a. Legal, regulatory or contractual provision

4. After initial recognition, an intangible asset shall be
measured using b. Provision for renewal or extension

a. Cost model c. Initial cost

b. Revaluation model d. Obsolescence

c. Cost model or revaluation model

d. Cost model or fair value model 4. Amortization of an intangible asset with a finite useful
life shall commence when

a. It is first recognized as an asset.

b. It is probable that it will generate future economic
benefits.

c. It is available for the intended use.

d. The cost can be identified with reasonable certainty.

5. Which disclosure is not required for an intangible

asset?

a. Useful life of the intangible asset

b. Reconciliation of carrying amount at beginning and end

c. Contractual commitment for the acquisition of intangbile

asset

d. Fair value of similar intangible asset used by the

competitor
1. Intangible assets are reported d. Capitalized as an intangible asset and amortized over
twenty years.
a. With an accumulated amortization account

b. Under property, plant and equipment

c. As a separate line item

d. All of these are allowed

2. Intangible assets are classified as

a. Amortizable and unamortizable

b. Limited life and indefinite life

c. Specifically identifiable and goodwill type

d. Legally restricted and goodwill type

3. Intangible assets with indefinite useful life are tested

for impairment

a. Quarterly at the quarterly reporting date

b. Annually at the annual reporting date

c. Biannually at the reporting date

d. There is no definite guideline for impairment

4. The major problem for an intangible asset is

determining

a. Fair value

b. Separability

c. Residual value

d. Useful life

5. Operating losses incurred during the start-up years of a

new entity should be

a. Accounted for like any other operating loss

b. Written off directly against retained earnings.

c. Capitalized and amortized over five years.

1. What is the method of amortizing intangible asset? c. Any provision for renewal or extension of the legal life

a. The straight line method, unless the pattern of the d. The amortization method
economic benefits can be determined reliably

b. The double declining balance in all circumstances

c. A subjective amount of periodic amortization

d. The straight line method in all circumstances

2. The cost of an internally generated asset includes all of

the following, except

a. Cost of materials and services used.

b. Compensation costs of personnel directly engaged.

c. Fees to register a legal right.

d. Expenditure on training staff to operate the asset.

3. Once recognized, intangible assets can be carried at

a. Cost less accumulated amortization

b. Cost less accumulated amortization and impairment

c. Revalued amount less accumulated amortization

d. Cost plus a notional increase in fair value

4. One factor that is not considered in determining the

useful life of an intangible asset is

a. Residual value

b. Provision for renewal or extension

c. Legal life

d. Expected action of competitors

5. Factors in determining the useful life of an intangible

asset include all, except

a. The expected use of the asset

b. Any legal or contractual provision

1. Which statement does not describe an intangible asset? d. Estimated useful life

a. The asset lacks physical substance.

b. The asset is monetary.

c. The asset provides future benefits.

d. The asset is classified as noncurrent asset.,

2. Which is a characteristic of an intangible asset?

a. Physical existence

b. Claim for a specific amount of cash

c. Long-lived

d. Held for sale

3. Costs incurred internally to create an intangible asset

are generally

a. Capitalized

b. Capitalized if useful life is indefinite

c. Expensed when incurred

d. Expensed if useful life is limited

4. An intangible asset that was acquired separately shall

initially be recognized at

a. Recoverable amount

b. Either cost or fair vlaue at the choice of the acquirer

c. Fair value

d. Cost

5. Intangible assets with indefinite life tested at least

annually for

a. Recoverability

b. Amortization

c. Impairment
Specific intangible asset a. Charged off in the current period.

1. Patent is an example of which category of intangible b. Amortized over the legal life of the purchased patent.
asset?
c. Added to factory overhead.
a. Market-related
d. Amortized over the remaining useful life of the patent
b. Customer-related for the product whose market would have been impaired
by competition from the newly patented product.
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
1. The intangible asset goodwill may be d. Trademark

a. Capitalized only when purchased.

b. Capitalized either when purchased or created internally 6. Purchased goodwill should

c. Capitalized only when created internally. d. Written off a. Be written off against retained earnings. b. Be written off
directly against retained earnings. as other expense.

c. Be written off by systematic charge as operating expense

over the period benefited.
2. Goodwill shall be recognized only when
d. Not be amortized.
a. It is purchased from another entity.

b. It can be established that a definite benefit has resulted

from good name, capable staff or reputation. 7. An entity should recognize goodwill at what point?

c. It is acquired through the purchase of another entity. d. a. Costs have been incurred in the development of goodwill
An entity reports above normal earnings for five years.
b. Goodwill has been created in the purchase of a business.

c. The entity expects a future benefit from the creation of

3. What is required with respect to accounting for goodwill.
goodwill?
d. The fair value 'exceeds the carrying amount.
a. Goodwill should be amortized over a five-year period.
over the useful life.

b. Goodwill should be amortized c. Goodwill should be 8. Goodwill should be tested for impairment at which
recorded and never adjusted. level?

d. Goodwill should be recorded and periodically evaluated a. Each reporting unit

for impairment. b. Each acquisition unit

c. Each identifiable long-term asset

4. Goodwill shall be tested for impairment d. Entire business as a whole
a. If there is an indication of impairment

b. Annually 9. Goodwill should be tested periodically for impairment

c. Every five years a. For the entity as a whole
d. On the acquisition of a subsidiary b. At the subsidiary level

c. At the industry segment level

5. Which intangible asset should be reported as a d. At the operating segment level
separate line item in the statement of financial position?

a. Goodwill
10. An impairment loss recognized for goodwill
b. Franchise
a. Shall not be reversed in a subsequent year.
c. Patent
b. May be reversed fully in a subsequent year.

c. May be reversed partly in a subsequent year.

d. Shall be reversed in a subsequent year

1. An entity is performing an annual test of the
impairment of goodwill for a cash generating unit. It was
determined that the fair value of the unit exceeds the 4. Which statement does not accurately describe the
carrying amount. Which statement is true concerning the accounting for goodwill?
test of impairment? a. Goodwill should be amortized over a reasonable period
a. Impairment is not indicated and no additional analysis is b. Goodwill can only be recorded as a result of a business
necessary. combination.
b. Goodwill should be written down as impaired. c. The cost of internally developing goodwill should be
c. The assets and liabilities should be valued to determine if recognized as expense as incurred.
there has been an impairment of goodwill. d. Goodwill should be examined at least annually for
d. Goodwill should be retested at the entity level. impairment.

2. An entity reported goodwill in last year's statement of 5. Which accurately describes the accounting for
financial position. How should the entity account for the goodwill?
reported goodwill in the current year? a. Recorded at cost and amortized over 40-year period
a. Determine whether fair value of the reporting unit is less b. Recorded at cost and amortized over a 10-year period
than the carrying amount and report an impairment loss on
goodwill in the income statement. c. Recorded at cost and tested for impairment every three
years
b. Determine the current year's amortizable amount and
report the amortization expense. d. Recorded at cost and tested for impairment on an
annual basis and more often if certain events occur
c. Determine whether the fair value of the reporting unit is
greater than the carrying amount and report the recovery
of any previous impairment in statement. the income

d. Determine whether the fair value of the reporting unit is

greater than the carrying amunt and report a gain on
goodwill in the income statement.

3. Why is goodwill referred to as a master valuation

account?

a. Goodwill represents the purchase price of an acquired

business.

b. Goodwill is the excess of the purchase price of the

acquired business over the fair value of the net identifiable
assets of the acquiree.

c. The value of a business is computed without

consideration of goodwill and then goodwill is added to
arrive at a master valuation.

d. Goodwill is the only account based on fair value.

 c. A trademark with indefinite useful life is not amortized
but tested for impairment at least annually.
1. A trademark is an example of which category of
intangible asset? d. A trademark is amortized and tested for impairment
whenever there is an indication of impairment.
a. Market-related

b. Customer-related

c. Artistic-related

d. Contract-based

2. 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

3. Which cost associated with a trademark should not be

capitalized?

a. Attorney fee

b. Consulting fee

c. Research and development fee

d. Design cost

4. 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.

5. 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.

 b. Payment to an entit franchisor fothe franchisor for that

1. A copyright is an example of which category of c. Legal fees paid

intangible asset?
d. Periodic payment obtain the franchisor based on the
a. Market-related franchisee's revenue

b. Customer-related

c. Artistic-related

d. Contract-based

2. Franchise is an example of which general category of

intangible asset?

a. Market-related

b. Customer-related

c. Artistic-related

d. Contract-based

3. 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

4. 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

5. Which of the following should be expensed as incurred

by the franchisee forng should be with finite useful life?

a. Amount paid to the franchisor for the franchise

 b. Payment to an entit franchisor fothe franchisor for that

1. A copyright is an example of which category of c. Legal fees paid

intangible asset?
d. Periodic payment obtain the franchisor based on the
a. Market-related franchisee's revenue

b. Customer-related

c. Artistic-related

d. Contract-based

Research and Development cost

2. Franchise is an example of which general category of 1. How should research and development costs be
intangible asset? accounted for?

a. Market-related a. Capitalized when incurred and then amortized over the

useful life.
b. Customer-related
b. Expensed in the period incurred.
c. Artistic-related
c. May be either capitalized or expensed when incurred
d. Contract-based depending upon the materiality.

d. Expensed in the period incurred unless with alternative

3. Customer list and order backlog are an example of future use or unless contractually reimbursable.
which general category of intangible asset?

a. Market-related 2. Which would be considered research and

b. Customer-related development?

c. Artistic-related a. Routine effort to refine an existing product

d. Contract-based b. Periodic alteration to existing production line

c. Marketing research to promote a new product

4. Copyright should be amortized over d. Construction of prototype

a. The legal life

b. The life of the creator plus fifty years 3. Which of the following costs should NOT be
capitalized?
c. Twenty years
a. Acquisition cost of equipment to be used on current and
d. The useful life or legal life, whichever is shorter future research projects.

b. Engineering cost incurred to advance the product to the

full production stage.
5. Which of the following should be expensed as incurred
by the franchisee forng should be with finite useful life? c. Cost incurred to file for patent.

a. Amount paid to the franchisor for the franchise d. Cost of testing prototype before economic feasibility.
 3. Which of the following is not one of the criteria which
must be met before development costs can be
4. Which is NOT research and development activity? capitalized?
a. Adaptation of an existing capability to a particular a. The entity has sufficient resources for the project.
requirement or customer need.
b. The entity intends to complete the project.
b. Application of research finding for a new product.
c. The entity can reliably identify the research costs
c. Laboratory research aimed at new knowledge. incurred to bring the project to economic feasibility.
d. Conceptual formulation of product alternative d. The project has achieved technical feasibility.

5. Which statement is TRUE about development cost? 4. Which of the research and following costs should be
a. Development cost must be expensed... development expense? excluded from

b. Development cost is not recognized. a. Modification of the design of a product.

c. Development cost may be capitalized as an intangible b. Acquisition of research and development equipment for
asset in very restrictive situations. use on a current project only.

d. Development cost must be capitalized c. Cost of marketing research for a new product.

d. Engineering activitresearch for advance the design of a

product to the manufacturing stage.

1. Research activities include all of the following, EXCEPT

5. Which of the following costs should be capitalized?
a. Search for application of research finding.
a. Cost of equipment for current research project only
b. Search for product or process alternative.
b. Engineering cost Infor current research product to the
c. Formulation and design of the possible product. full production stage

d. Design, construction and testing of prototype. c. Cost of research to determine whether a market for the
product exists

d. Salaries of research staff

2. Development activities include all of the following,
EXCEPT

a. Design of tools, jigs, molds and dies. 1. Which research and development costs should be
capitalized and amortized over current and future
b. Design, construction and operation of a pilot plant.
periods?
c. Design, construction and testing of a chosen alternative
a. Research and development general laboratory building
for a new or improved product.
b. Inventory used for a specific research project
d. Laboratory activities aimed at new knowledge.
c. Administrative salaries allocated to research

d. Research findings purchased from another entity to aid a

particular research project currently in process.
 b. Laboratory research aimed at discovery of new
knowledge
2. If an entity constructs a laboratory building to be used
as a research and development facility, the cost of the c. Design, construction and testing of production prototype
laboratory building is matched against earnings as and model

a. Research and development expense in the period of d. Testing in search for or valuation of product or process
construction. alternative

b. Depreciation deducted as part of research and

development expense.
6. An activity that would be expensed currently as
c. Depreciation or immediate writeoff depending on research and developr development costs is
accounting policy.
a. Engineering follow-through in an early phase of
d. An expense at such time as productive research has commercial production
been obtained from the facility.
b. Legal work in connection with patent application and the
licensing of patent

3. A research and development activity for which the cost c. Testing in search for or evaluation of product or process
would be expensed as incurred is alternative

a. Design, construction and testing of preproduction d. Adaptation of an existing capability to a particular

prototype and model requirement or customer need as a part of continuing
commercial activity
b. Quality control during commercial production

c. Periodic design change to existing product

7. At the beginning of the current year, an entity
d. Adaptation of an existing capability to a particular purchased equipment for use in developing a new
requirement or customer need product. The entity uses the straight line depreciation
method. The equipment could provide benefits over a 10-
year period. However, the new product development is
4. Which is a research and development cost? expected to take five years, and the equipment can be
used only for this project. The expense for the current
a. Research and development performed under contract
year in relation to the equipment equals
for others
a. The total cost of the equipment
b. Development or improvement of technique and process
b. One-fifth of the cost of the equipment
c. Offshore oil exploration that is the primary activity of an
entity c. One-tenth of the cost of the equipment

d. Market research related to a major product for the d. Zero

entity

8. Which is not considered a research and development

5. Which is an example of activities that would be Activity?
excluded from research and development costs?
a. Routine on-going effort to refine, enrich or improve
a. Quality control during commercial production including quality of existing
routine testing of product
b. Laboratory reing produced at discovery of new
knowledge

c. Conceptual formulation and design of possible or

d. Design, construction and operation of a pilot plant

9. An entity has recently completed a highly publicized

research and development project. Which statement is
the most accurate?

a. Costs incurred during the research phase can be

capitalized.

b. Costs incurred during the development phase can be

capitalized if criteria such as technical feasibility of the
project being established are met.

c. Training costs of technicians used in research can be

capitalized.

d. Designing of jigs and tools would qualify as research

activities.

10. Which of the following research and development

costs should be capitalized and amortized over current
and future periods?

a. Labor and material costs incurred in building a prototype

model

b. Cost of testing equipment that will also be used in

another separate research and development project
scheduled to begin next year

c. Administrative salaries allocated to research and

development

d. Research findings purchased from another entity to aid a

particular research project currently in process