Hi! The questions are all about intangible assets and research and development costs. Kindly explain your answer.

1.Which of the following is INCORRECT?

a.Costs incurred internally to create intangible asset are expensed when incurred.

b.An intangible asset lacks physical existence, is monetary, provides long-term benefit and is classified as noncurrent asset.

c.Amortization of an intangible asset with a finite useful life shall commence when it is available for the intended use.

d.An intangible asset is regarded as having an indefinite useful life when there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows to the entity.

2.Which of the following is CORRECT?

a.The legal life of trademark is 10 years and renewable after every 10 years.

b.A trademark is amortized and tested for impairment whenever there is an indication of impairment.

c.The cost of purchasing right for a product that might other have seriously competed with the purchaser's patented product should be amortized over the legal life of the purchased patent.

d.The cost of successfully defending a patent from infringement by a competitor should be charged to patent and amortized over the remaining useful life of the patent.

3.Which of the following is CORRECT ?

a.Copyright should be amortized over the life of the creator (writer, composer) plus 50 years.

b.Legal fees paid to the franchisee's lawyers to obtain the franchise should be expensed as incurred by the franchisee for a franchise with finite useful life.

c.Copyright, trademark, and perpetual franchise should not be amortized.

d.Start-up costs including legal and state fees to organize a new entity should be capitalized and amortized over a reasonable period.

4.Which of the following is INCORRECT?

a.Goodwill should be reported as a separate line item in the Statement of Financial Position.

b.In a business combination, the excess of acquisition cost over the fair value of the identifiable net assets acquired is Goodwill.

c.An impairment loss for goodwill shall not be reversed in a subsequent year.

d.Goodwill should be tested periodically for impairment for the entity as a whole (at the entity level).

5.Which of the following is INCORRECT ?

a.A research and development activity for which the cost would be expensed as incurred would be design, construction and testing of preproduction prototype or model.

b.Development cost may be capitalized as an intangible asset in very restrictive condition.

c.Cost of testing prototype before economic feasibility has been demonstrated should not be capitalized.

d.Acquisition cost of equipment to be used on current research project only may be capitalized.

6.Which of the following is INCORRECT?

a.Under the direct approach of measuring goodwill, average earnings divided by capitalization rate equals goodwill.

b.When the net fair value of the identifiable assets acquired and liabilities assumed are more than the purchase price or consideration transferred for the entity, the difference is credited to Gain on Bargain Purchase.

c.Under the US GAAP, Franchise is contract-based, Copyright is artistic-related, Trademark is market-related and Patent is technology-based intangible asset.

d.Legal fees of successfully prosecuting or defending a patent shall not be capitalized while legal fees in securing the patent rights shall not be expensed.

7.The Intellectual Property Code of the Philippines, which took effect on January 1, 1998 is Republic Act or

a.RA 9298

b.RA 8298

c.RA 8293

d.RA 9293

e.RA 8392

8.Which statement/s is/are CORRECT?

a.If a related patent is acquired in order to extend the life of the old patent, the cost of the related patent less the unamortized cost of the old patent shall be amortized over the extended life.

b.If a competitive patent is acquired to extend the life of an original patent, the cost of the competitive patent shall be amortized over the remaining life of the old patent.

c.If the patent is acquired by an entity from an original patentee, the cost shall be amortized over the remaining legal life.

d.If a patent is internally developed, the original cost shall be impaired over the legal life or useful life, whichever is shorter.

e.All of the four statements

f.None of the four statements

g.Two of the four statements

9.Which statement/s is/are INCORRECT?

a.Under the new lease standard IFRS 16, the lessor is required to initially recognize a right of use asset for the lease term and a lease liability for the obligation to make lease payments.

b.Legally, leasehold improvements belong to the lessee upon termination of the lease contract.

c.Leasehold improvement, which is classified under Intangible assets, is depreciated over the lease term or useful life of the improvement, whichever is shorter.

d.Renewal option and residual value are ignored in computing the depreciation of of the leasehold improvement.

e.All of the four statements

f.None of the four statements

g.Two of the four statements

10. Which statement/s is/are CORRECT?

a.The cost to produce the product masters is capitalizable as Computer Software while the costs to actually product the software from the masters and package the software for sale are charged to inventory.

b.Computer software that is not an integral part of the related hardware/computer-controlled machine is an intangible asset; otherwise, it shall be treated as property, plant and equipment.

c.Research activities typically occur prior to the beginning of commercial production while development activities occur during commercial production; thus, development costs may be capitalized.

d.Development cost may or may not be recognized as an intangible asset depending on whether it has an alternative future use.

e.All of the four statements

f.None of the four statements

g.Two of the four statements