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     37.     A loss on impairment of an intangible asset is the difference between the asset’s
a.     carrying amount and the expected future net cash flows.
b.     carrying amount and its fair value.
c.     fair value and the expected future net cash flows.
d.     book value and its fair value.

     38.     Weaver Boxing Company needs to determine if its indefinite-life intangibles other than goodwill have been impaired and should be reduced or written off on its balance sheet. The impairment test(s) to be used is (are)
          Recoverability Test     Fair Value Test
a.          Yes     Yes
b.          Yes     No
c          No     Yes
d.          No     No

     39.     The carrying amount of an intangible is
a.     the fair market value of the asset at a balance sheet date.
b.     the asset's acquisition cost less the total related amortization recorded to date.
c.     equal to the balance of the related accumulated amortization account.
d.     the assessed value of the asset for intangible tax purposes.
     40.     Which of the following research and development related costs should be capitalized and amortized over current and future periods?
a.     Research and development general laboratory building which can be put to alternative uses in the future
b.     Inventory used for a specific research project
c.     Administrative salaries allocated to research and development
d.     Research findings purchased from another company to aid a particular research project currently in process

     41.     Which of the following principles best describes the current method of accounting for research and development costs?
a.     Associating cause and effect
b.     Systematic and rational allocation
c.     Income tax minimization
d.     Immediate recognition as an expense

     42.     How should research and development costs be accounted for, according to a Financial Accounting Standards Board Statement?
a.     Must be capitalized when incurred and then amortized over their estimated useful lives.
b.     Must be expensed in the period incurred.
c.     May be either capitalized or expensed when incurred, depending upon the materiality of the amounts involved.
d.     Must be expensed in the period incurred unless it can be clearly demonstrated that the expenditure will have alternative future uses or unless contractually reimbursable.

     43.     Which of the following costs should be excluded from research and development expense?
a.     Modification of the design of a product
b.     Acquisition of R & D equipment for use on a current project only
c.     Cost of marketing research for a new product
d.     Engineering activity required to advance the design of a product to the manufacturing stage

     44.     If a company constructs a laboratory building to be used as a research and development facility, the cost of the laboratory building is matched against earnings as
a.     research and development expense in the period(s) of construction.
b.     depreciation deducted as part of research and development costs.
c.     depreciation or immediate write-off depending on company policy.
d.     an expense at such time as productive research and development has been obtained from the facility.

     45.     Operating losses incurred during the start-up years of a new business should be
a.     accounted for and reported like the operating losses of any other business.
b.     written off directly against retained earnings.
c.     capitalized as a deferred charge and amortized over five years.
d.     capitalized as an intangible asset and amortized over a period not to exceed 20 years.

     46.     The costs of organizing a corporation include legal fees, fees paid to the state of incorporation, fees paid to promoters, and the costs of meetings for organizing the promoters. These costs are said to benefit the corporation for the entity's entire life. These costs should be
a.     capitalized and never amortized.
b.     capitalized and amortized over 40 years.
c.     capitalized and amortized over 5 years.
d.     expensed as incurred.

     47.     Which of the following would not be considered an R & D activity?
a.     Adaptation of an existing capability to a particular requirement or customer's need.
b.     Searching for applications of new research findings.
c.     Laboratory research aimed at discovery of new knowledge.
d.     Conceptual formulation and design of possible product or process alternatives.

     48.     The total amount of patent cost amortized to date is usually
a.     shown in a separate Accumulated Patent Amortization account which is shown contra to the Patent account.
b.     shown in the current income statement.
c.     reflected as credits in the Patent account.
d.     reflected as a contra property, plant and equipment item.

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