The cost of an internally developed unidentifiable intangible is expensed as incurred.Accordingly, which one of the following costs would be expensed in the year it was incurred?
A)legal cost of obtaining a patent
B)cost of improvements with a three-year life made to an asset that is being leased by the company for a five-year period
C)deferred charges
D)cost incurred to train management-level employees

Question

Quizplus · Accepted Answer

The cost incurred to train management-level employees is a general training expense and not related to any identifiable intangible asset. Therefore, it should be expensed as incurred. The legal cost of obtaining a patent would be capitalized as part of the cost of obtaining the patent. The cost of improvements with a three-year life made to an asset that is being leased would be capitalized and amortized over the useful life of the asset. Deferred charges would be capitalized and amortized over their useful life.

The Cost of an Internally Developed Unidentifiable Intangible Is Expensed