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Acct 553 Midterm

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ACCT 553 Midterm
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  1. (TCO C) Under current accounting practice, intangible assets are classified as (Points: 5)
      amortizable or unamortizable.
      limited-life or indefinite-life.
      specifically identifiable or goodwill-type.
      legally restricted or goodwill-type.

2. (TCO C) Which of the following intangible assets should not be amortized? (Points: 5)
      Customer lists
      Perpetual franchises
      All of these intangible assets should be amortized.

3. (TCO C) The intangible asset goodwill may be (Points: 5)
      capitalized only when purchased.
      capitalized either when purchased or created internally.
      capitalized only when created internally.
      written off directly to retained earnings.

4. (TCO C) ELO Corporation purchased a patent for $90,000 on September 1, 2008. It had a useful life of ten years. On January 1, 2010, ELO spent $22,000 to successfully defend the patent in a lawsuit. ELO feels that as of that date, the remaining useful life is five years. What amount should be reported for patent amortization expense for 2010? (Points: 5)

5. (TCO C) During 2011, Bond Company purchased the net assets of May Corporation for $1,000,000. On the date of the transaction, May had $300,000 of liabilities. The fair value of May's assets when acquired were as follows:

How should the $500,000 difference between the fair value of the net assets acquired ($1,500,000) and the cost ($1,000,000) be accounted for by Bond? (Points: 5)
      The $500,000 difference should be credited to retained earnings.
      The $500,000 difference should be recognized as a gain.
      The current assets should be recorded at $540,000 and the noncurrent assets should be recorded at $760,000.
      A deferred credit of...


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