Question : 11.An activity that would be expensed currently as research and : 1242681

11.An activity that would be expensed currently as research and development costs is the

a.Testing in search for or evaluation of product or process alternatives

b.Adaptation of an existing capability to a particular requirement or customer’s need as a part of continuing commercial activity

c.Legal work in connection with patent applications or litigation, and the sale or licensing of patents

d.Engineering follow-through in an early phase of commercial production

12.Should the following fees associated with the registration of an internally developed patent be capitalized?

Registration

Legal feesfees

a.Yes                    Yes

b.Yes                                  No

c.No                     Yes

d.No                    No

13.Which of the following assets acquired in 2014 are amortizable?

GoodwillTrademarks

a.No                                                    No

b.No                                                    Yes

c.Yes                                                   No

d.Yes                                                   No

14.A purchased patent has a remaining life of 15 years. It should be

a.Expensed in the year of acquisition

b.Amortized over 15 years regardless of its useful life

c.Amortized over its useful life if less than 15 years

d.Amortized over 40 years

15.Which of the following amounts incurred in connection with a trademark should be capitalized?

Cost of a                                        Registration

Successful defensefees

a.Yes                        No

b.Yes                        Yes

c.No                        Yes

d.No                                                       No

16.Zink Company owns 32% of Ace Company’s outstanding voting stock. Zink Company normally should account for its investment in Ace Company using the

a.Fair value method.

b.Cost method.

c.Consolidation procedure.

d.Equity method.

17.An investor purchased a bond as a long-term investment on January 1. Annual interest was received on December 31. The investor’s interest income for the year would be lowest if the bond was purchased at

a.A discount

b.A premium

c.Par

d.Face value

18.The theoretical justification for expensing research and development (R&D) cost as it is incurred is based on which of the following arguments?

a.R&D costs provide no future benefits, thus it does not meet the definition of an asset

b.R&D costs are incurred to generate current period revenue, thus the matching concept requires that it be expensed as incurred.

c.Whether R&D costs that have been incurred will provide future benefit is uncertain, thus it does not meet the definition of an asset.

d.Since R&D costs have been incurred during the current period, they meet the definition of an expense.

19.When a patent is successfully defended in court, the cost of the lawsuit

a.Should be expensed as incurred because it is a period cost.

b.Should be added to the cost of the patent and depreciated over the remaining useful life of the patent.

c.Should be added to the cost of the patent which is then expensed as a period cost.

d.Has already been expensed so there is no further action to take.

20.Goodwill is an intangible asset

a.That has a definite life and its cost should be amortized over its useful life.

b.That is recorded when the company has projected earnings in excess of earnings expected for an investment in a similar company in the same industry.

c.That is reviewed for impairment when circumstances indicate that impairment may have occurred.

d.That is reviewed annually to determine whether impairment has occurred.