Question : 71. Victor Company purchased a patent for $250,000 at the beginning : 1224944

71. Victor Company purchased a patent for $250,000 at the beginning of 2011, and estimated that its expected useful life was 10 years. The patent has a legal life of 20 years. What amount should be recorded as amortization expense for the patent in 2011? 
A. $      -0-
B. $  8,333
C. $12,500
D. $25,000

72. According to accounting standards, the costs of intangible assets with an indefinite life, such as goodwill, should: 
A. not be amortized, but should be reviewed annually for impairment.
B. be reported on the statement of retained earnings in the year in which it is acquired.
C. be amortized over a reasonable period of time not to exceed 40 years.
D. be debited to an expense account entirely in the year in which acquired.

73. Goodwill can be recorded as an asset when a(n): 
A. business has above normal profitability compared to other businesses in its industry.
B. business can determine that it has created customer goodwill and name recognition.
C. offer is received to purchase the business at a price in excess of the value of the assets.
D. business is purchased and payment is made in excess of the value of the net assets.

74. Peck Tech. purchased a patent at the beginning of 2011 for $400,000. The patent’s legal life was 20 years, but economic benefits were expected for 10 years. Also, during 2011, Peck’s incurred research and development costs of $200,000. The book value of the patents at December 31, 2011, is: 
A. $400,000
B. $360,000
C. $350,000
D. $560,000

75. Hit and Miss, Inc. purchased a patent at the beginning of 2011 for $250,000. Economic benefits were expected for 10 years, but the patent’s legal life was 20 years. Also during 2011, the company incurred research and development costs of $270,000. Patent amortization expense for 2011 is: 
A. $12,500
B. $26,000
C. $52,000
D. $25,000

76. Which of the following is an intangible asset? 
A. Oil
B. Goodwill
C. Retained earnings
D. Land

77. Xtra Company purchased goodwill from Argus for $144,000. Argus had developed the goodwill over 6 years. How much would Xtra amortize the goodwill for its first year? 
A. $8,640
B. $24,000
C. Goodwill is not amortized.
D. Not enough information.

78. The exclusive right to use a certain name or symbol is called as:  
A. franchise.
B. patent.
C. trademark.
D. copyright.

79. American Corporation purchased a building for $900,000 at the end of year 2002. The building will be depreciated over 40 years and is estimated to have a $100,000 salvage value. At the end of 2012, when it had a book value of $700,000, it was appraised for $1,100,000. A potential buyer offered $900,000. American rejected the offer. At what amount should the net book value of the building be at the end of 2012. 
A. $1,100,000
B. $   900,000
C. $   600,000
D. $   700,000

80. Equipment with a cost of $160,000, an estimated salvage value of $40,000, and an estimated life of 15 years was depreciated by the straight-line method for 4 years. Due to obsolescence, it was determined that the useful life should be shortened by 3 years and the salvage value changed to zero. The depreciation expense for the current and future years is: 
A. $11,636.
B. $16,000.
C. $11,000.
D. $8,000.