Question 1

Which of the following is considered research and development costs?

Accepted Answer

All of the options listed are considered research and development costs. These costs are incurred in the process of creating new knowledge or applying existing knowledge to create a new product or process. This can involve laboratory research, design and conceptualization, or application of research findings.

Question 2

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

Accepted Answer

The cost of the laboratory building should be capitalized as a long-term asset and depreciated over its useful life as part of research and development costs. This matches the cost of the building with the period of time it is used to support research and development activities.

Question 3

Alonzo Co.acquires 3 patents from Shaq Corp.for a total of $360,000.The patents were carried on Shaq's books as follows: Patent AA: $5,000; Patent BB: $2,000; and Patent CC: $3,000.When Alonzo acquired the patents their fair values were: Patent AA: $20,000; Patent BB: $240,000; and Patent CC: $60,000.At what amount should Alonzo record Patent BB?

Accepted Answer

The answer of Alonzo Co.acquires 3 patents from Shaq Corp.for...

Question 4

Start-up costs include organizational costs, such as legal and state fees incurred to organize a new business entity.These costs should be

Accepted Answer

The answer of Start-up costs include organizational costs, such as...

Question 5

Mini Corp.acquires a patent from Maxi Co.in exchange for 2,500 shares of Mini Corp.'s $5 par value ordinary shares and $75,000 cash.When the patent was initially issued to Maxi Co., Mini Corp.'s shares were selling at $7.50 per share.When Mini Corp.acquired the patent, its shares were selling for $9 a share.Mini Corp.should record the patent at what amount?

Accepted Answer

The cost of the patent is the fair market value of the shares and cash exchanged. The fair market value of the shares is 2,500 shares x $9 per share = $22,500. Therefore, the total cost is $22,500 + $75,000 = $97,500.

Question 6

Which of the following would be considered research and development?

Accepted Answer

Construction of prototypes is considered research and development as it involves creating new or improved products or processes through experimentation and testing. Routine efforts to refine an existing product and periodic alterations to existing production lines may involve minimal innovation and are not necessarily considered R&D. Marketing research to promote a new product also does not fall under the category of R&D.

Question 7

Lynne Corporation acquired a patent on May 1, 2010.Lynne paid cash of $30,000 to the seller.Legal fees of $1,000 were paid related to the acquisition.What amount should be debited to the patent account?

Accepted Answer

The amount debited to the patent account should include all costs necessary to acquire the patent and make it ready for use, which includes both the purchase price and the legal fees. Therefore, $30,000 (purchase price) + $1,000 (legal fees) = $31,000.

Question 8

Contreras Corporation acquired a patent on May 1, 2010.Contreras paid cash of $25,000 to the seller.Legal fees of $900 were paid related to the acquisition.What amount should be debited to the patent account?

Accepted Answer

The amount debited to the patent account should include both the purchase price and any additional costs necessary to acquire the patent, such as legal fees. Therefore, the total amount is $25,000 (purchase price) + $900 (legal fees) = $25,900.

Question 9

Which of the following costs should be capitalized in the year incurred?

Accepted Answer

Costs to successfully defend a patent can be capitalized as they meet the criteria for qualifying as an intangible asset. The other options do not meet the criteria for capitalization and should be expensed in the year incurred.

Question 10

Which of the following should not be reported under the "Other income and expense" section of the income statement?

Accepted Answer

Trade name amortization expense is typically reported as an operating expense, not under "Other income and expense."

Question 11

The total amount of patent cost amortized to date is usually

Accepted Answer

The answer of The total amount of patent cost amortized...

Question 12

How should research and development costs be accounted for, according to an IASB Statement?

Accepted Answer

According to IAS 38 Intangible Assets, research costs 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. Development costs should be capitalized when certain criteria are met and then amortized over their estimated useful lives. Therefore, option D is the correct answer.

Question 13

Research and development costs

Accepted Answer

Research and development costs may result in the development of a patent, which is a tangible asset. They are not necessarily easily identified with specific projects and are therefore not intangible assets.

Question 14

Which of the following costs would be capitalized?

Accepted Answer

The answer of Which of the following costs would be...

Question 15

Jeff Corporation purchased a limited-life intangible asset for $120,000 on May 1, 2009.It has a useful life of 10 years.What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2011?

Accepted Answer

The annual amortization expense is calculated by dividing the purchase price by the useful life. In this case, the annual amortization expense is $120,000 ÷ 10 = $12,000. 
From May 1, 2009 to December 31, 2011, there are 2 years and 8 months, or 32 months. 
Therefore, the total amount of amortization expense should have been recorded on the intangible asset by December 31, 2011 is $12,000 × (32 ÷ 12) = $32,000 (rounded to the nearest dollar). 
So, the correct choice is C.

Question 16

Which of the following costs should be excluded from research and development expense?

Accepted Answer

Cost of marketing research for a new product should be excluded from research and development expense because it is considered a selling expense, not an R&D expense. R&D expenses typically include costs directly associated with the research and development of new products or services, not the costs to market them.

Question 17

Which of the following would not be considered an R & D activity?

Accepted Answer

Adaptation of an existing capability to a particular requirement or customer's need is generally considered to be an engineering activity rather than an R&D activity. R&D activities typically involve the creation or discovery of new knowledge or technologies. The other options, B, C, and D, all involve some form of R&D activity.

Question 18

Operating losses incurred during the start-up years of a new business should be

Accepted Answer

Operating losses incurred during the start-up years of a new business should be accounted for and reported like the operating losses of any other business. This means that they should be included in the income statement for the current period and be used to offset any income earned during the same period. Writing off the losses directly against retained earnings or capitalizing them as a deferred charge or intangible asset are not appropriate treatments for start-up losses.

Question 19

Which of the following intangible assets should be shown as a separate item on the statement of financial position?

Accepted Answer

Goodwill should be shown as a separate item on the statement of financial position because it represents the excess of the purchase price over the fair value of net assets acquired in a business combination. This excess amount is attributed to intangible elements such as customer relationships, brand reputation, and other factors that contribute to the expected future earnings of the acquired business. Franchise, patent, and trademark are also intangible assets but they may or may not meet the criteria for separate recognition depending on their specific characteristics and legal status.

Question 20

Which of the following costs would be capitalized?

Accepted Answer

The answer of Which of the following costs would be...

Quiz 12: Intangible Assets

Which of the following is considered research and development costs?

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

Start-up costs include organizational costs, such as legal and state fees incurred to organize a new business entity.These costs should be

Which of the following would be considered research and development?

Lynne Corporation acquired a patent on May 1, 2010.Lynne paid cash of $30,000 to the seller.Legal fees of $1,000 were paid related to the acquisition.What amount should be debited to the patent account?

Contreras Corporation acquired a patent on May 1, 2010.Contreras paid cash of $25,000 to the seller.Legal fees of $900 were paid related to the acquisition.What amount should be debited to the patent account?

Which of the following costs should be capitalized in the year incurred?

Which of the following should not be reported under the "Other income and expense" section of the income statement?

The total amount of patent cost amortized to date is usually

How should research and development costs be accounted for, according to an IASB Statement?

Research and development costs

Which of the following costs would be capitalized?

Jeff Corporation purchased a limited-life intangible asset for $120,000 on May 1, 2009.It has a useful life of 10 years.What total amount of amortization expense should have been recorded on the intangible asset by December 31, 2011?

Which of the following costs should be excluded from research and development expense?

Which of the following would not be considered an R & D activity?

Operating losses incurred during the start-up years of a new business should be

Which of the following intangible assets should be shown as a separate item on the statement of financial position?

Which of the following costs would be capitalized?