Multiple Choice: Noncurrent Assets Select the correct answer for each of the following.

1. Companies often are reluctant to record the costs of intangible assets as assets because:

a. Outlays for intangible assets typically provide nothing of value to the company.

b. Intangibles seldom have a useful life of more than one year.

c. Management and investors generally are more skeptical of the value of assets that cannot be seen and touched.

d. Intangible assets are already incorporated in the market price of the stock and to record them separately would involve double counting.

2. Which of the following is characteristic of depreciable assets?

a. The market value of the assets at the time of purchase typically is greater than the amount paid to acquire them.

b. The price at which the company could resell the assets immediately after their purchase typically is less than the amount paid.

c. The amount of depreciation expense recorded during the period is intended to represent the decline in the market value of the asset during the period.

d. Most depreciable assets increase in value over time.

e. None of the above.
Operating assets include:

a. Land and inventory.

b. Buildings and accounts receivable.

c. Land and equipment.

d. Furniture and accounts payable.

e. Botha and c.
. When operating assets are no longer needed and are held for disposal:

a. The book value should be written down to the net realizable value.

b. The difference between the original purchase price and the expected disposal value should be recorded as a gain or loss.

c. The amount recorded as depreciation expense should be no more than the change in the net realizable value of the asset during the period.

d. The book value of the assets should be reduced to zero because it may not be possible to sell the assets to another company.
Goodwill is valued at:

a. The difference between the price paid for an ongoing business and the fair value of the identifiable assets acquired less liabilities assumed.

b. The difference between the fair value of the identifiable assets acquired and the liabilities assumed.

c. The total amount of cash paid out to acquire another company.

d. The total amount of cash paid out to acquire another company, less the value of the identifiable assets acquired.