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Indicate Whether Each of the Following Statements Is True or False

Question 82

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Indicate whether each of the following statements is true or false.

Premises:
The recognition of an impairment loss involves a cash outflow classified as a financing activity.
A patent with a useful life of 5 years and a legal life of 10 years is amortized over 5 years.
To recognize an impairment loss on goodwill,Amortization Expense will be increased and the Goodwill account will be decreased.
If it is determined that the original value recorded for goodwill is too high,then the income statement account,impairment loss,will be increased.
Intangible assets with indefinite useful lives must be tested each year for impairment.
Responses:
False
True

Correct Answer:

The recognition of an impairment loss involves a cash outflow classified as a financing activity.
A patent with a useful life of 5 years and a legal life of 10 years is amortized over 5 years.
To recognize an impairment loss on goodwill,Amortization Expense will be increased and the Goodwill account will be decreased.
If it is determined that the original value recorded for goodwill is too high,then the income statement account,impairment loss,will be increased.
Intangible assets with indefinite useful lives must be tested each year for impairment.
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