INTERMEDIATE ACCOUNTING EXAM 9

General Rule: Please, read all the questions properly, observe carefully the problems, and answer the
following with intelligence. You must put your solutions at the back of the paper, which is written clearly and
readable. WARNING! Cheating is not allowed, being caught on act of cheating that person/s will face a great
consequence. (5 Points)

1. Amortization of an intangible asset with a finite useful life shall commence with
A. It is first recognized as an asset.
B. It is probable that it will generate future economic benefits.
C. It is available for the intended use.
D. The cost can be measured with reasonable certainty.

2. The appropriate method of amortizing intangible asset is best described by which of the following?
A. The straight-line method, unless the pattern in which the asset's economic benefits are consumed by the
entity can be determined reliably.
B. The double declining balance in all circumstances.
C. Management can make a subjective amount of periodic amortization without regard to any particular
method.
D. The straight-line method in all circumstances.

3.Which statement is correct concerning amortization of intangible assets?

I. The depreciable amount of an intangible asset with a finite useful life shall be allocated on a
systematic basis over its useful life.
II. An intangible asset with an indefinite useful life shall not be amortized but tested for impairment
annually and when there is an indication that the intangible asset may be impaired.
A. I only C. Both I and II
B. II only D. Neither I nor II

4.Which of the following statements is true in relation to intangible assets?

I. Intangible assets cannot be treated as having an indefinite useful life.
II. Intangible assets with a finite useful life should be measured at cost and tested annually for
impairment.
A. I only C. Both I and II
B. II only D. Neither I nor II

5. Which of the following represents the maximum amortization period intangible assets?
A. 10 years
B. 20 years
C. 40 years
D. No arbitrary cap on the useful life