Select the best answer for each of the following.
1. What is the proper time or time period over LO 12.1 which to amortize an intangible asset if there is no forseable limit on the period of time over which the intangible assets is expected to be used in operations?
a. 40 years
b. 50 years
c. Immediately
d. Not amortized
2. Plaza Company originated late in 2015 and began LO 12.2 operations on January' 2, 2016. Plaza is engaged in conducting market research studies on behalf of manufacturers. Prior to the start of operations, the following costs w were incurred:
Attorney's fees in connection with organization of Plaza ...... $ 4,000
Improvements to leased offices prior to occupancy .......... 7,000
Meetings of incorporators, state filing fees, and other company expenses . 5,000
What is the amount of expense recognized for 2016?
a. $16,000
b. $9,000
c. $7,000
d. $4,000
3. Frye Company incurred R&D costs in 2016 as LO 12.2 follows:
Equipment acquired for use in multiple R&D projects .... $ 1,000,000
Depreciation on the equipment ........... 150,000
Materials used ................... 200,000
Wages and salaries of R&D personnel ........ 500,000
Outside consulting fees .............. 100,000
Appropriately allocated indirect costs ........ 250,000
The total R&D expenses reported in Frye’s 2016 income statement should be:
a. $650,000
b. $900,000
c. $1,200,000
d. $1,800,000
4. Which of the following assets typically arc amortized?
5. Which of the following amounts incurred in connection with a trademark should be capitalized?
6. A purchased patent has a remaining legal life of 15 years. It should:
a. Be expensed in the year of acquisition
b. Be amortized over 15 years regardless of its useful life
c. Be amortized over its useful life if less than 15 years
d. Not be amortized
7. During 2012, Traco Machine Company spent $176,000 on R&1) costs for an invention. This invention was patented on January' 2, 2013, at a nominal cost that was expensed in 2013. The patent had a legal life of 20 years and an estimated useful life of 8 years. In January' 2017, Traco paid $16,000 for legal fees in a successful defense of the patent. Amortization for 2017 should be:
a. $0
b. $1,000
c. $4,000
d. $26,000
8. Sherwood Corporation incurred $68,000 of R&D costs in its laboratory' to develop a patent that was granted on January' 2, 2016. Legal fees and other costs associated with registration of the patent totaled $13,600. Sherwood estimates that the economic life of the patent will be 8 years. What amount should Sherwood charge to patent amortization expense for the year ended December 31, 2016?
a. $0
b. $800
c. $1,700
d. $10,200
9. Goodwill represents the excess of the purchase price of an acquired company over the:
a. Sum of the fair values assigned to tangible assets acquired minus liabilities assumed
b. Sum of the fair values assigned to identifiable assets acquired minus liabilities assumed
c. Sum of the fair values assigned to intangible assets acquired minus liabilities assumed
d. Book value of an acquired company
10. Flint Corporation's general ledger as of December 31, 2016, includes the following accounts:
Corporation (start-up) costs ......... $5000
Deposits with advertising agency (will
be used to promote goodwill) ........ 8000
Discounts on bonds payable ......... 15,000
Excess of purchase price over fair
value of the identifiable net assets of
acquired company ............ 70,000
Trademarks ............... 12,000
In the preparation of Flint's balance sheet as of December 31, 2016, what should be reported as total intangible assets?
a. $82,000
b. $87,000
c. $95,000
d. $110,000

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