Week 3: Theory of Accounts (Part III) INTANGIBLE ASSETS QUIZ

The factors considered in determining the useful life of an intangible asset include all of the following, except

Select one:
a. Any provision for renewal or extension of legal life of the asset.
b. The amortization method used.
c. Any legal or contractual provision that may limit the useful life.
d. The expected use of the asset.

Which of the following is not an intangible asset?

Select one:
a. Franchise
b. Trade name
c. Copyright
d. Research and development cost

Amortization of an intangible asset with a finite useful life shall commence when

Select one:
a. It is available for the intended use.
b. It is probable that it will general economic benefit.
c. It is first recognized as an asset.
d. The cost can be identified with reasonable certainty

Which of the following statements is true in relation to control by the entity of intangible asset?

Select one:
a. The capacity of the entity to control the economic benefits from an intangible asset would normally stem
from legal rights that are enforceable in a court of law.
b. All of these statements are true.
c. Market share and customer loyalty cannot normally be recognized as intangible asset because an entity
cannot control the action of customers.
d. The skill of employees arising out of the benefits of training costs cannot be recognized as intangible asset.

Which type of intangible asset is amortized?

Select one:
a. Limited life
b. Both limited life and indefinite life
c. Indefinite life
d. Neither limited life nor indefinite life

Which of the following methods of amortization is normally used for an intangible asset?

Select one:
a. Units of production
b. Double declining balance
c. Straight line
d. Sum of the year's digit
Intangible assets are reported in the statement of financial position

Select one:
a. All of these are allowed in presenting intangible assets
b. As a separate line item
c. With an accumulated amortization account
d. Under property, plant and equipment

After initial recognition, an intangible asset shall be measured using the

Select one:
a. Either cost model or fair value model
b. Either cost model or revaluation model
c. Revaluation model
d. Cost model

An intangible asset is regarded as having an indefinite useful life when

Select one:
a. The useful life of the intangible asset arises from contractual right.
b. There is a foreseeable limit to the period over which the asset is expected to generate net cash inflows to the
entity.
c. There is no foreseeable limit to the period over which the asset is expected to generate net cash inflows to
the entity.
d. The useful life of the intangible asset arises from legal right.

It is a systematic allocation of the amortizable amount of an intangible asset over the useful life.

Select one:
a. Expiration
b. Amortization
c. Allocation
d. Realization

The factor that need to be considered in determining the useful life of an intangible asset include all of the following,
except

Select one:
a. Residual value
b. Expected action of competitors
c. Technical obsolescence
d. Expected usage of the asset by the entity

Which of the following statements is true concerning separate acquisition of an intangible asset?

Select one:
a. The cost of a separately acquired asset comprises the purchase price and any directly attributable cost of
preparing the asset for the intended use.
b. If an intangible asset is acquired separately, the cost of the intangible asset can usually be measured reliably.
c. All of these statements are true.
d. If payment for an intangible asset is deferred beyond normal credit terms, the cost is equal to the cash price
equivalent.
An intangible asset is defined as

Select one:
a. A nonmonetary asset without physical substance.
b. An identifiable monetary and nonmonetary asset without physical substance.
c. An identifiable nonmonetary asset without physical substance.
d. An identifiable asset without physical substance.

Which of the following does not describe an intangible asset?

Select one:
a. The asset lacks physical existence.
b. The asset is classified as noncurrent asset.
c. The asset is monetary.
d. The asset provides long term benefit.

What is the appropriate method of amortizing intangible asset?

Select one:
a. The straight line method in all circumstances.
b. The double declining balance in all circumstances.
c. The straight line method, unless the pattern in which the economic benefits are consumed can be
determined reliably.
d. A subjective amount of periodic amortization

An intangible asset shall be recognized if

Select one:
a. It is probable that future economic benefits attributable to the asset will flow to the entity.
b. It is probable that future economic benefits attributable to the asset will flow to the entity and the cost of
the intangible asset can be measured reliably.
c. It is possible that future economic benefits attributable to the asset will flow to the entity and the cost of the
intangible asset can be measured reliably.
d. The cost of the intangible asset can be measured reliably.

A brand name that was acquired separately shall initially be recognized at

Select one:
a. Either cost or fair value at the choice of the acquirer
b. Recoverable amount
c. Cost
d. Fair value

Which of the following statements is true in relation to internally generated intangible asset?

Select one:
a. The cost of internally generated intangible asset comprises all directly attributable costs necessary to create,
produce and prepare the asset for the intended use.
b. All of these statements are true.
c. Internally generated goodwill shall not be recognized as an intangible asset.
 d. Internally generated brand, masthead, publishing title, and customer list shall not be recognized as an
intangible asset.

Operating losses incurred during the start-up years of a new entity should be

Select one:
a. Capitalized as a deferred charge and amortized over five years.
b. Written of directly against retained earnings.
c. Accounted for and reported like any other operating losses
d. Capitalized as an intangible asset and amortized over twenty years.

The cost of an internally generated asset includes all of the following, except

Select one:
a. Expenditure on materials used in generating the intangible asset.
b. Fees register a legal right.
c. Expenditure of training staff to operate the asset.
d. Compensation cost of personnel directly engaged in generating asset.

Which of the following represents the maximum amortization period mandated for an intangible asset with finite
useful life?

Select one:
a. 10 years
b. 40 years
c. No arbitrary cap on the useful life has been established
d. 20 years

The residual value of an intangible asset with a finite useful life shall be assumed to zero, except

Select one:
a. When there is a commitment by a third party to purchase the asset at the end of the useful life.
b. There are no exceptions.
c. When there is an active market for the asset and it is probable that such market will exist at the end of the
useful life.
d. When there is a commitment by a third party to purchase the asset at the end of the useful life or there is an
active market for the asset and it is probable that such market will exist.

Once recognized, an intangible asset can be carried at

Select one:
a. Cost less accumulated amortization
b. Cost plus a notional increase in fair value
c. Cost less accumulated amortization and impairment losses
d. Revalued amount less accumulated amortization

All of the following expenditures are expensed when incurred, except

Select one:
a. Business relocation or reorganization costs
b. Advertising and promotion costs
c. Start-up costs
 d. Payment in advance of delivery of goods or he rendering of services

Which of the following would qualify as an intangible asset?

Select one:
a. Legal cost paid to lawyer to register a patent
b. College tuition fees paid to employees who can decide to enrol in an executive M.B.A program while
working with the entity.
c. Advertising and promotion
d. Operating loss during the initial stage of the project

Directly attributable costs of preparing the intangible asset for the intended use include all, except

Select one:
a. Cost of employee benefits arising directly from bringing the asset to working condition
b. Professional fee arising directly from bringing the asset at working condition
c. Cost of testing whether the asset is functioning properly
d. Initial operating loss

Cost incurred internally to create intangible asset are

Select one:
a. Capitalized if useful life is indefinite
b. Expensed if useful life is limited
c. Capitalized
d. Expensed when incurred

Intangible assets with indefinite useful life are tested for impairment

Select one:
a. There is no guideline for impairment
b. Annually at the annual reporting date
c. Quarterly at the quarterly reporting date
d. Biannually at the reporting date

Which disclosure is note required with respect to an intangible asset?

Select one:
a. Useful life of the intangible asset
b. Contractual commitment for the acquisition of intangible asset
c. Reconciliation of carrying amount at the beginning and end of the year
d. Fair value of similar intangible asset used by competitor

An entity that acquires an intangible asset may use the revaluation model for subsequent measurement only if

Select one:
a. An active market exists for the intangible asset.
b. The useful life of the intangible asset can be reliably determined.
c. The cost of the intangible asset can be measured reliably.
d. The intangible asset is a monetary asset.
The cost of a separately acquired intangible asset comprises the purchase price, including import duties and non-
refundable purchase taxes, and

Select one:
a. Directly attributable cost of preparing the asset for the intended use
b. Administration and other general overhead cost
c. Cost of introducing a new product or service
d. Cost of conducting a business in a new location

An intangible asset acquired by way of government grant may be initially recorded at

Select one:
a. Nominal amount or zero plus any directly attributable expenditure
b. Fair value
c. Neither fair value nor nominal amount
d. Either fair value or nominal amount or zero plus directly attributable expenditure

Entities should evaluate indefinite life intangible assets at least annually for

Select one:
a. Estimated useful life
b. Recoverability
c. Impairment
d. Amortization

Which of the following statements is incorrect concerning acquisition of an intangible assets as part of a business
combination?

Select one:
a. If there is an active market for the intangible asset, the fair value may also be equal to the quoted price of
similar asset.
b. The fair value of an identifiable intangible asset acquired in a business combination cannot be measured
with sufficient reliability separately form goodwill.
c. If there is an active market for the intangible asset, the fair value is equal to the quoted price of an identical
asset.
d. The cost of the intangible asset is based on the fair value at the date of acquisition.

Which of the following is a characteristic of an intangible asset?

Select one:
a. Claim to a specific amount of cash in the future
b. Physical existence
c. Long-lived
d. Held for sale

Which of the following is a criterion that must be met in order for an intangible asset to recognized other than
goodwill?

Select one:
a. The fair value can be measured reliably.
b. The asset is identifiable and lacks physical substance.
c. The asset is expected to be used in the production or supply of goods or services.
 d. The asset is a part of the activities aimed at gaining new scientific or technical knowledge.

Under current accounting practice, intangible assets are classified as

Select one:
a. Limited life and indefinite life
b. Specifically, identifiable and goodwill type
c. Legally restricted and goodwill type
d. Amortizable and unamortizable

The amortization method used shall reflect the pattern in which the asset's economic benefits are consumed by the
entity. If such pattern cannot be determined reliably, what is the amortization method used?

Select one:
a. Diminishing balance method
b. Straight line
c. Production method
d. Ration of current year's sales to the total expected sales

Which does not qualify as an intangible asset?

Select one:
a. Computer software
b. Notebook computer
c. Registered patent
d. Copyright

Which is not a consideration in determining the useful life of an intangible asset?

Select one:
a. Obsolescence
b. Provision for renewal or extension
c. Initial cost
d. Legal, regulatory or contractual provision