Q1. Under U.S. generally accepted accounting principles (GAAP), which of the following costs associated with intangible assets is most likely to be capitalized?

A)   Research and development costs associated with software development.

B)   The cost of an acquisition of a patent from an outside entity.

C)   The costs associated with an internally created trademark.

Q2. Under U.S. GAAP:

A)   firms are allowed to capitalize research and development (R&D) costs when specific criteria are met.

B)   franchise or license costs for agreements of less than five years are expensed as incurred.

C)   advertising costs for other than direct-response advertising costs are expensed as incurred.

Q3. Under U.S. Generally Accepted Accounting Principles (GAAP), development cost of patents and copyrights can be capitalized:

A)   when purchased from other entities.

B)   when purchased or developed internally but excluding registration costs.

C)   when developed internally.

Q4. Under U.S. GAAP, which statement is CORRECT?

A)   Goodwill cannot be recognized and capitalized in a purchase transaction.

B)   Research and development costs are not expensed.

C)   Purchased patent and copyright costs are not expensed.

Q5. Statement of Financial Accounting Standard (SFAS) 86 requires that costs incurred to establish the feasibility of computer software must be:

A)   viewed like Research & Development (R&D) costs and expensed as incurred.

B)   capitalized only after the software is completely developed.

C)   expensed once the economic feasibility is established.

Q6. Which of the following is least likely to be a problem with accounting for internally generated intangible assets?

A)   Determining the economic life.

B)   The potential benefits are spread over a long time period.

C)   Costs of developing these assets may not be easily separable.

答案和详解如下：

Q1. Under U.S. generally accepted accounting principles (GAAP), which of the following costs associated with intangible assets is most likely to be capitalized?

A)   Research and development costs associated with software development.

B)   The cost of an acquisition of a patent from an outside entity.

C)   The costs associated with an internally created trademark.

Correct answer is B)         

The cost of an acquisition of a patent from an outside entity is correct because this cost may be capitalized.

Q2. Under U.S. GAAP:

A)   firms are allowed to capitalize research and development (R&D) costs when specific criteria are met.

B)   franchise or license costs for agreements of less than five years are expensed as incurred.

C)   advertising costs for other than direct-response advertising costs are expensed as incurred.

Correct answer is C)         

In the U.S., research and development (R&D) costs are always expensed when incurred. Advertising costs are also expensed as incurred. However, direct response advertising costs can be capitalized when specific criteria are met. Franchise or license costs may be capitalized regardless of the time period of the agreement.

Q3. Under U.S. Generally Accepted Accounting Principles (GAAP), development cost of patents and copyrights can be capitalized:

A)   when purchased from other entities.

B)   when purchased or developed internally but excluding registration costs.

C)   when developed internally.

Correct answer is A)

When patents and copyrights are internally developed, only the legal fees incurred for registration can be capitalized. However, if the patents and copyrights are purchased from other entities, full acquisition cost can be capitalized.

Q4. Under U.S. GAAP, which statement is CORRECT?

A)   Goodwill cannot be recognized and capitalized in a purchase transaction.

B)   Research and development costs are not expensed.

C)   Purchased patent and copyright costs are not expensed.

Correct answer is C)

Purchased patent and copyright costs are not expensed is correct because these costs are capitalized.

Q5. Statement of Financial Accounting Standard (SFAS) 86 requires that costs incurred to establish the feasibility of computer software must be:

A)   viewed like Research & Development (R&D) costs and expensed as incurred.

B)   capitalized only after the software is completely developed.

C)   expensed once the economic feasibility is established.

Correct answer is A)

SFAS 86 requires that all the costs incurred in establishing software feasibility be viewed as R&D costs and expensed as incurred. Once the economic feasibility has been established, subsequent costs (for software to be sold or leased to others) can be capitalized as part of product inventory.

Q6. Which of the following is least likely to be a problem with accounting for internally generated intangible assets?

A)   Determining the economic life.

B)   The potential benefits are spread over a long time period.

C)   Costs of developing these assets may not be easily separable.

Correct answer is B)         

The problems with accounting for internally generated intangible assets are: determination of economic life and separation of the cost for development.

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