Multiple Choice Question
Select the right answer (only one possible answers unless otherwise stated).
1 An example of an item that is not an intangible asset is
(a) Patent
(b) Goodwill
(c) Computer
(d) Computer software
(e) Trademark
2 An example of a trademark which should unambiguously be capitalized is
(a) The logo of a business school designed and created by the personnel of the school
(b) The trademark ‘Chivas’ acquired by Pernod Ricard within the purchase of the whole Seagram Company’s liquor business
(c) The name ‘One world’, referring to a group of airlines including, among others, American Airlines, British Airways and Cathay Pacific
(d) None of these
(e) All of these
3 All recorded intangible assets should be amortized to match their cost with the revenue they contribute to generate
(a) True
(b) False
4 Albeniz Company spent 500 CU throughout X1 in promoting a not well-known trademark it created internally during that same year. This trademark is supposed to have an indefinite life. The company applies IFRS/IAS GAAP in its financial statements. The 500 CU should be
(a) Capitalized and amortized over 40 years
(b) Capitalized and not amortized but tested for impairment
(c) Not capitalized but expensed in X1
(d) Capitalized and amortized over 20 years
(e) None of these
5 Same question as (4) but Albeniz applies US GAAP
(a) Capitalized and amortized over 40 years
(b) Capitalized and not amortized but tested for impairment
(c) Not capitalized but expensed in X1
(d) Capitalized and amortized over 20 years
(e) None of these
6 Same question as (4) but Albeniz purchased the trademark (instead of having developed it internally) and applies IFRS/IAS
(a) Capitalized and amortized over 40 years
(b) Capitalized and not amortized but tested annually for impairment
(c) Not capitalized but expensed in X1
(d) Capitalized and amortized over 20 years
(e) None of these
7 Same question as (4) but Albeniz purchased the trademark (instead of having developed it internally) and applies US GAAP
(a) Capitalized and amortized over 40 years
(b) Capitalized and not amortized but tested for impairment
(c) Not capitalized but expensed in X1
(d) Capitalized and amortized over 20 years
(e) None of these
8 Training costs of personnel should be
(a) Capitalized and amortized over 40 years
(b) Capitalized and not amortized but tested for impairment
(c) Not capitalized but expensed
(d) Capitalized and amortized over 20 years
(e) None of these
9 Since economic benefits derived from intangible assets are uncertain, their costs of acquisition should be expensed in the period when they are incurred. Which principle is put into practice in this statement?
(a) Going concern principle
(b) Matching principle
(c) Prudence principle
(d) Accrual principle
10 Among intangible assets, R&D has received special attention on the part of financial analysts as it helps describe the effort of the firm to be innovative and build its future competence. Which ratio(s) is (are) often used in such evaluation?
(a) R&D intensity ¼ R&D expenses/Sales
(b) R&D per employee ¼ R&D expense/number of employee
(c) Annual growth rate of R&D ¼ [(R&D expenses year 2 – R&D expenses year 1)/R&D expenses year 1]
(d) All of these.