____1. Current Canadian practice indicates that the maximum period over which an intangible asset should be amortized is

a. 20 years.

b. 28 years.

c. 40 years.

d. its useful life or legal life, whichever is shorter.

____2. Purchased goodwill represents

a. the excess of the price paid over the fair value of the net assets obtained in a business combination.

b. the excess of the price paid over the book value of the net assets obtained in a business combination.

c. the difference in the aggregate amount of the market prices of the shares of the combining companies.

d. a tangible asset.

____3. As it is generally used in accounting, what is depreciation?

a. It is a process of asset valuation for balance sheet purposes.

b. It applies only to long-lived intangible assets.

c. It is used to indicate a decline in market value of a long-lived asset.

d. It is an accounting process that allocates long-lived asset cost to accounting periods.

____4. What would be the double declining-balance depreciation for 2021?

a. $72,000

b. $96,000

c. $110,000

d. $120,000

____5. If Bosnia expensed the total cost of the equipment at the time of purchase, what was the effect on 2020 and 2021 income before taxes, assuming Bosnia uses straight-line depreciation?

a. $245,000 understated and $55,000 overstated

b. $270,000 understated and $30,000 overstated

c. $272,500 understated and $55,000 overstated

d. $300,000 understated and $30,000 overstated

____6. If, at the beginning of 2022, Bosnia decides the equipment still has five more years of life beyond December 31, 2021, with the same residual value, what would be the straight-line depreciation for 2022? (Assume straight-line used in all years.)

a. $30,000

b. $32,083

c. $38,500

d. $55,000