How should the cost of intangible assets with indefinite lives be accounted for? O They should be capitalized as an asset and checked for impairment periodically. O They should be amortized over the assets' estimated useful lives, or their legal lives, whichever is shorter O They should be amortized over the assets' estimated useful lives, or their legal lives, whichever is longer. O They should be expensed at acquisition. eTextbook and Media

How should the cost of intangible assets with indefinite lives be accounted for? O They should be capitalized as an asset and checked for impairment periodically. O They should be amortized over the assets' estimated useful lives, or their legal lives, whichever is shorter O They should be amortized over the assets' estimated useful lives, or their legal lives, whichever is longer. O They should be expensed at acquisition. eTextbook and Media

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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An entity that acquires an intangible asset may use the revaluation modelfor subsequent measurement only if A. The useful life of the intangible asset can be reliably determined.B. An active market exists for the intangible asset.C. The cost of the intangible asset can be measured reliably.D. The intangible asset is a monetary asset.
3) Which of the following best describes a depreciation base?7) The acquisition cost of an asset relative to its fair value O The estimated market value of an asset at the end of its useful life O The historical cost of an asset less the depreciation recognized to date O The amount that should be expensed over an asset's useful life
In which of the following situations would a cost incurred after an asset’s acquisition be capitalized? A.The useful life of the asset is increased. B.The amount of the expenditure must be immaterial. C.The expenditure is necessary to maintain the working order of the asset. D.There is no increase in the useful life of an asset.
Which of the following intangible assets should not be amortized? a. Copyrights b. Customer lists c. Perpetual franchises d. All of these intangible assets should be amortized.
List several common intangible assets. How is the life determined that is to be used to compute amortization?
If a company purchases a limited-life intangible asset, they _____________ amortize the asset and they should test the asset for impairment using_______________ a.) should; the recoverability test and then the fair value test. b.) should not; the fair value test only. c.) should; the fair value test only. d.) should not; the recoverability test and then the fair value test.
What is an intangible asset? Should all intangible assets be subject to amortization? Explain why or why not. Why are some intangible assets not amortized? What is the implication to the financial statements?
What costs are capitalized, or added to the asset account when acquiring property and equipment? A. Only the ticketed list price of the asset purchased. B. Any cost that is considered normal and necessary to get the asset into position and condition to be used. C. The lower of cost or net realizable value. D. Any of the above are allowed by U.S. GAAP as the cost to capitalize when acquiring property and equipment.
TRUE OR FALSE Amortization of intangibles is usually done over the asset’s legal life.
When an intangible asset has a finite life, amortization should be taken over what period of time? The shorter of the asset’s useful life or its legal life. The longer of the asset’s useful life or its legal life. According to U.S. GAAP, all costs should be expensed. No amortization should be taken on intangible assets.
1. What amount should be recorded initially as cost of the right of use asset? 2. What is the annual depreciation of the right of use asset?
Which of the following is a CORRECT statement about long-term asset impairment? A. Under U.S. GAAP, an asset that has been written down because of impairment can be written back up if it increases in value in the future. B. An asset is impaired if the net book value is less than the expected future cash flows. C. If an asset is impaired, the expected future cash flows will exceed the fair value of the asset. D. If an asset is impaired, the impairment loss is the difference between the net book value and the fair value.