Reading 37: Long-Lived Assets LOS f习题精选

assets, affect, useful, 2010

LOS f: Describe amortization of intangible assets with finite useful lives and the estimates that affect the amortization calculations.

Allocating an intangible asset’s cost to the income statement over time is known as:

A)	depreciation.

B)	amortization.

C)	depletion.

Allocating an intangible asset’s cost to the income statement over time is known as amortization. The same process is known as depreciation for tangible assets. For natural resources, allocation of cost to the income statement over time is commonly referred to as depletion.

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发表于 2010-4-19 15:34 | 只看该作者

Intangible assets with finite useful lives are:

A)	amortized over their expected useful lives.

B)	amortized over their actual lives.

C)	not amortized, but are tested for impairment at least annually.

Intangible assets with finite lives are amortized over their expected useful lives, which is an estimate. Actual lives of intangible assets are often not known in advance. Intangible assets with infinite lives are not amortized, but are tested for impairment at least annually.

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发表于 2010-4-19 15:34 | 只看该作者

Which of the following items is least likely an example of an intangible asset with an indefinite life?

Goodwill.

B)	Acquired patents.

C)	Trademarks that can be renewed at minimal cost.

Acquired patents are most likely purchased with the intent to use over a specific period of time and therefore would be an example of an intangible asset with a finite life. Goodwill, by definition, is an intangible asset with an indefinite life. Trademarks that can be renewed at minimal cost are also considered to be intangible assets with infinite lives.

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发表于 2010-4-19 15:34 | 只看该作者

Under normal circumstances, intangible assets with indefinite lives are:

A)	not amortized but subject to impairment.

B)	amortized over a reasonable period but not subject to impairment.

C)	amortized over a reasonable period and subject to impairment.

Intangible assets with indefinite lives are not amortized but are subject to impairment charges. Under such situations, there may be in impairment in the asset value where events and circumstances indicate that the firm may not be able to recover the carrying value through future use. Examples include significant declines in market value of the asset or significant deterioration in the asset’s physical condition.

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