MULTIPLE CHOICE

1. Which condition must be met for an item to be recognized as an intangible asset other
than goodwill?
a. The fair value can be measured reliably.
b. The item is part of an activity aimed at gaining new scientific or technical
knowledge
c. The item is expected to be used in the production or supply of goods or services.
d. The item is nonmonetary, identifiable and lacks physical substance.
2. An intangible asset is identifiable when
a. It is separable
b. It arises from contractual and other legal right.
c. It is either separable or it arises from contractual and other legal right.
d. It is neither separable nor it arises from contractual and other legal right.
3. The recognition criteria for an intangible asset include which of the following conditions?
a. The intangible asset must be measured at cost.
b. The cost can be measured reliably
c. It is probable that future economic benefit will arise from use.
d. It is probable that future economic benefit will arise from use and the cost
can be measured reliably.
4. Which statement is true in relation to internally generated intangible asset?
a. Internally generated brand, masthead, publishing tide, and customer list shall not
be recognized as an intangible asset.
b. The cost of internally generated intangible asset comprises of all directly
attributable costs necessary to produce and prepare the asset for the intended use.
c. Internally generated goodwill shall not be recognized as an intangible asset.
d. All of these statements are true.
5. After initial recognition, an intangible asset shall be measured using
a. Cost model
b. Revaluation model
c. Cost model or revaluation model
d. Cost model or fair value model
6. An entity may use the revaluation model for an intangible asset only when
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.
7. Which statement is true concerning amortization and impairment of intangible assets?
a. Intangible assets with finite useful life are amortized over the useful life.
b. Intangible assets with finite useful life are tested for impairment at the of
reporting period when there is an indication of impairment
c. Intangible assets with indefinite useful life are not amortized but are tested for
impairment at least annually.
d. All of these statements are true.
8. An intangible asset is regarded as having an indefinite useful life when
a. There is no foreseeable limit to the period over which the asset is expected to
generate net cash inflows to the entity.
b. There is a foreseeable limit to the period over which the asset is expected to
generate net cash inflows to the entity.
c. The useful life of the intangible asset arises from contractual right.
d. The useful life of the intangible asset arises from legal right.
9. Which would not qualify as an intangible asset?
a. Computer software
 b. Registered patent
c. Copyright
d. Notebook computer
10. Which of the following would qualify as an intangible asset?
a. Advertising and promotion
b. Tuition fees of an employee for an M.B.A. program
c. Operating loss during the initial stages of the project
d. Legal costs paid to lawyers to register a patent
11. Which is not a consideration in determining the useful life of an intangible asset?
a. Legal, regulatory or contractual provision
b. Provision for renewal or extension
c. Initial cost
d. Obsolescence
12. Amortization of an intangible asset with a finite useful life shall commence when
a. It is first recognized as an asset
b. It is probable that it will generate future benefits.
c. It is available for the intended use
d. The cost can be identified with reasonable certainty
13. Which disclosure is not required for an intangible asset?
a. Useful life of the intangible asset
b. Reconciliation of carrying amount at beginning and end
c. Contractual commitment for the acquisition of intangible asset
d. Fair value of similar intangible asset used by the competitor
14. Intangible assets are reported
a. With an accumulated amortization account
b. Under property, plant and equipment
c. As a separate line item
d. All of these are allowed
15. Intangible assets are classified as
a. Amortizable and unamortizable
b. Limited life and indefinite life
c. Specifically identifiable and goodwill type
d. Legally restricted and goodwill type
16. Intangible assets with indefinite useful life are tested for impairment
a. Quarterly at the quarterly reporting date
b. Annually at the annual reporting date
c. Biannually at the reporting date
d. There is no definite guideline for impairment
17. The major problem for an intangible asset is determining
a. Fair value
b. Separability
c. Residual value
d. Useful life
18. One factor that is not considered in determining the useful life of an intangible asset is
a. Residual value
b. Provision for renewal or extension
c. Legal life
d. Expected action of competitors
19. Factors in determining the useful life of an intangible asset include all, except:
a. The expected use of the asset
b. Any legal or contractual provision
c. Any provision for renewal or extension of the legal life
d. The amortization method
20. What is the method of amortizing intangible asset?
a. Straight line method, unless the pattern of the economic benefits can be
determined reliably.
b. Double declining balance in all circumstances
c. A subjective amount of periodic amortization
d. Straight line method in all circumstances
21. Once recognized, an intangible asset can be carried at
a. Cost less accumulated amortization
b. Cost less accumulated amortization and impairment
c. Revalued amount less accumulated amortization
d. Cost plus a notional increase in fair value
22. The cost of an internally generated asset includes all of the following, except
a. Cost of materials used
b. Compensation costs of personnel directly engaged.
c. Fees to register a legal right
d. Expenditure on training staff to operate the asset.
23. Operating loss incurred during the start-up years of a new entity should be
a. Accounted for like any other operating loss
b. Written off directly against retained earnings.
c. Capitalized and amortized over five years.
d. Capitalized as an intangible asset and amortized over twenty years.
24. The intangible asset goodwill may be
a. Capitalized only when purchased
b. Capitalized either when purchased or created internally
c. Capitalized only when created internally
d. Written off directly against retained earnings
25. Goodwill shall be recognized only when
a. It is purchased from another entity
b. It can be established that a definite benefit has resulted from good name, capable
staff or reputation
c. It is acquired through the purchase of another entity
d. An entity reports above normal earnings.
26. What is required with respect to accounting for goodwill?
a. Goodwill should be amortized over a five-year period
b. Goodwill should be amortized over the useful life.
c. Goodwill should be recorded and never adjusted
d. Goodwill should be recorded and periodically evaluated for impairment
27. Goodwill shall be tested for impairment
a. If there is an indication of impairment
b. Annually
c. Every five years
d. On the acquisition of a subsidiary
28. Which intangible asset should be reported as separate line item in the statement of
financial position?
a. Goodwill
b. Franchise
c. Patent
d. Trademark
e.