The reason goodwill is referred to as a master valuation account is that a. It represents the purchase price of a business that is about to be sold b. It is the difference between the fair value of the net identifiable assets as compared with the purchase price of the acquired business c. The value of a business is computed without consideration of goodwill and then goodwill is added to arrive at a master valuation d. It is the only account in the financial statements that is based estimated value When an entity successfully defended a patent from infringement by a competitor, the cost of litigation should be charged to a. Patent and amortized over the legal life of the patent b. Legal fees and amortized over five years or less c. Expense of the period d. Patent and amortized over the remaining useful life of the patent What is the maximum amortization period mandated for intangible assets? a. 10 years b. 20 years c. 40 years d. No arbitrary cap on the useful life has been established Which of the following research and development costs should be capitalized and amortized over current and future periods? a. Labor and material costs incurred in building a prototype model b. Cost of testing equipment that will also be used in another separate research and development project scheduled to begin next year c. Administrative salaries allocated to research and development d. Research findings purchased from another company to aid a particular research project currently in process Which of the following costs should be excluded from research and development expense? a. Modification of the design of a product b. Acquisition of R and D equipment for use in current project only c. Cost of marketing research for a new product d. Engineering activity to advance the design of product to the manufacturing stage Which of the following cannot be shown as part of cash in the current asset section of the balance sheet? a. Customer's check in payment of past due account b. Cash in a special checking account for payroll c. Unrestricted compensating balance for a loan d. Cash deposited with a utility company Which of the following is/are not considered as a change in accounting policy under PAS 8? I. The application of accounting policy for transactions, other than events or conditions that differ in substance from those previously occurring . The application of a new accounting policy for transactions, other events or conditions that did not occur previously or were immaterial a. I only b. II only c. I and II d. None, I and II are considered as a change in accounting policy In interim reporting, which of the following should be accounted for on a time proportion basis? a. Depreciation b. Costs of sales c. Productivity bonus d. Inventory value decline