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142. Intangible assets are the rights and privileges that result from ownership of long-lived assets that a. must be generated internally. b. are depletable natural resources. c. have been exchanged at a gain. d. do not have physical substance.

143. Identify the item below where the terms are not related. a. Equipment—depreciation b. Franchise—depreciation c. Goodwill—amortization d. Oil well—depletion

144. An intangible asset should a. be amortized over a period of 40 years. b. not be amortized if it has an indefinite life. c. be amortized over its useful life or 40 years, whichever is longer. d. be amortized over its useful life or 40 years, whichever is shorter.

145. The cost of successfully defending a patent in an infringement suit should be a. charged to Legal Expenses. b. deducted from the book value of the patent. c. added to the cost of the patent. d. recognized as a loss in the current period.

146. An asset that cannot be sold individually in the market place is a. a patent. b. goodwill. c. a copyright. d. a trade name.

147. Goodwill can be recorded a. when customers keep returning because they are satisfied with the company's products. b. when the company acquires a good location for its business. c. when the company has exceptional management. d. only when there is an exchange transaction involving the purchase of an entire business.

148. On July 1, 2002, Marsh Company purchased the copyright to Parsons Computer tutorials for $81,000. It is estimated that the copyright will have a useful life of 5 years with an estimated salvage value of $6,000. The amount of Amortization Expense recognized for the year 2002 would be a. $16,200. b. $7,500. c. $15,000. d. $8,100.

149. Which of the following is not an intangible asset arising from a government grant? a. Goodwill b. Patent c. Trademark d. Trade name

150. The amortization period for an intangible asset cannot exceed a. 50 years. b. 20 years. c. 40 years. d. 75 years.

151. Cost allocation of an intangible asset is referred to as a. amortization. b. depletion. c. accretion. d. capitalization.

152. A patent a. has a legal life of 40 years. b. is nonrenewable. c. can be renewed indefinitely. d. is rarely subject to litigation because it is an exclusive right.

153. If a company incurs legal costs in successfully defending its patent, these costs are recorded by debiting a. Legal Expense. b. an Intangible Loss account. c. the Patent account. d. a revenue expenditure account.

154. Copyrights are granted by the federal government a. for the life of the creator or 50 years, whichever is longer. b. for the life of the creator plus 50 years. c. for the life of the creator or 50 years, whichever is shorter. d. and therefore cannot be amortized.

155. Goodwill a. is only recorded when generated internally. b. can be subdivided and sold in parts. c. can only be identified with the business as a whole. d. can be defined as normal earnings less accumulated amortization.

156. In recording the acquisition cost of an entire business, a. goodwill is recorded as the excess of cost over the fair value of identifiable net assets. b. assets are recorded at the seller's book values. c. goodwill, if it exists, is never recorded. d. goodwill is recorded as the excess of cost over the book value of identifiable net assets.

157. Research and development costs a. are classified as intangible assets. b. must be expensed when incurred under generally accepted accounting principles. c. should be included in the cost of the patent they relate to. d. are capitalized and then amortized over a period not to exceed 40 years.

158. A computer company has $3,000,000 in research and development costs. Before accounting for these costs, the net income of the company is $2,700,000. What is the amount of net income or loss after these R & D costs are accounted for? a. $300,000 loss. b. $2,700,000 net income. c. $0. d. Cannot be determined from the information provided.

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