(6). The purpose of depreciation is to systematically and rationally depreciate the cost over the life of the asset to ensure appropriate capital for future replacement. (a). True (b). False (7). Trademarks are considered to have an indefinite life and are therefore not subject to amortization. (a). True (b). False (8). When the investor owns more than 50% of the voting common stock of the investee, the investee is considered to be under the legal control of the investor. (a). True (b). False (9). Accumulated other comprehensive income is not reported with shareholder's equity. (a). True (b). False (10). The defined benefit plan is a type of plan in which the employer's contribution into the pension fund is based on a formula. (a). True (b). False m). Which of the following are characteristics of a perpetual inventory system? (a). Management knows how much inventory is on hand at all times. (b). Purchases of inventory are recorded to the inventory account. (c). The computer tracks inventory upon a sale and the cost of goods and inventory are immediately updated. (. All of these. 2). For valuation of inventory, the lower of cost or market rule may be applied to (w), the total inventory (b). each item or the total of inventory c. each item, the total of inventory, or major categories of inventory (4). each item 03. Alternative terms for property, plant, and equipment include all of the following except (a), plant assets (b). fixed assets (c). long-term assets (2. operational assets (4). Depreciation of an asset based on the number of hours of usage is an) (a), time-based method (b), accelerated method (c), replacement method (4), activity-based method (5). Intangible assets are initially recorded at (a). cost ().expected future value (c) expected present value of expected cash flows (. present fair value