Question :
31. Firms treat expenditures as assets when they: A. have acquired rights to : 1230691
31. Firms treat expenditures as assets when they:
A. have acquired rights to the future use of a resource as a result of a past transaction or event.
B. can reliably measure the cost of the expected benefits at the time of initial recognition.
C. can exercise the entity’s right to, or control of, the benefit.
D. can obtain the future service potential and control others’ access to it.
E. all of the above
32. An expenditure qualifies as a(n) _____ if it has the following characteristics:
1. It embodies a probable future benefit.
2. A particular entity can obtain the benefit and control others’ access to it.
3. The transaction or other event giving rise to the entity’s right to, or control of, the benefit has already occurred.
4. The fair value of the item at the time of initial recognition can be measured with sufficient reliability.
A. asset
B. liability
C. shareholders’ equity
D. revenue
E. expense
33. An expenditure qualifies as an asset if it has which of the following characteristics?
A. It embodies a probable future benefit.
B. A particular entity can obtain the benefit and control others’ access to it.
C. The transaction or other event giving rise to the entity’s right to, or control of, the benefit has already occurred.
D. The fair value of the item at the time of initial recognition can be measured with sufficient reliability.
E. all of the above
34. For many technology and pharmaceutical firms:
A. a large portion of their value to an acquirer might relate to in-process research and development (IPR&D).
B. in-process research and development (IPR&D) acquired in a business combination that meets the separability criterion as an asset is recognized and measured initially at fair value.
C. The firm that developed the in-process research and development (IPR&D) expensed the costs as they were incurred.
D. all of the above
E. none of the above
35. In a corporate acquisition the:
A. purchase price measures the fair value of the acquired enterprise.
B. goodwill reflects the fair value of assets that cannot be separately identify.
C. goodwill is an asset because it is part of the fair value of the acquired firm.
D. all of the above
E. none of the above
36. Firms generally treat expenditures to develop intangibles internally as
A. expenses when incurred.
B. expenses over the useful life.
C. assets.
D. liabilities.
E. goodwill.
37. Firms treat expenditures to develop intangibles internally as assets under U.S. GAAP when _____ the point of technological feasibility; and under IFRS when _____ the point of technological feasibility.
A. software development costs are incurred after; development costs are incurred generally after
B. software development costs are incurred after; development costs are incurred generally before
C. software development costs are incurred before; development costs are incurred generally before
D. software development costs are incurred before; development costs are incurred generally after
E. none of the above.
38. Firms recognize expenditures to acquire intangibles externally from third parties as _____ if the intangibles are either separable or arise from contractual or other legal rights.
A. assets
B. liabilities
C. retained earnings
D. revenue
E. expenses
39. The acquisition cost of equipment is the sum of the invoice price
A. less any discounts, plus transportation costs, installation charges, and any other costs incurred before the equipment is ready for use.
B. less any discounts and transportation costs, plus installation charges, and any other costs incurred after the equipment is ready for use.
C. transportation costs, installation charges, and any other costs incurred before the equipment is ready for use.
D. transportation costs, installation charges, and any other costs incurred after the equipment is ready for use.
E. less any discounts, plus installation charges, and any other costs incurred after the equipment is ready for use.
40. Firms sometimes acquire assets by exchanging an asset other than cash or by issuing common stock. In these cases, acquisition cost is
A. the fair value of the asset received, only.
B. the fair value of the consideration given, only.
C. either the fair value of the consideration given or the fair value of the asset received, depending on which amount is lower.
D. either the fair value of the consideration given or the fair value of the asset received, depending on which the firms can more reliably measure.
E. either the fair value of the consideration given or the fair value of the asset received, depending on which amount is higher.
