1.According to the Financial Accounting Standards Board, what is the appropriate measurement basis for equipment used in the manufacturing process and inventory that is held for sale?

A)  Historical cost                      Historical cost

B)  Fair value                             Lower of cost or market

C)  Historical cost                      Lower of cost or market

D)  Fair value                             Historical cost

2.Are the following statements about copyrights and patents acquired from an independent third party, correct or incorrect?

Statement #1 – Copyrights and patents are tangible assets that can be separately identified.
Statement #2 – Purchased copyrights and patents are amortized on a straight line basis over 30 years.

A)  Incorrect                              Correct

B)  Correct                                Incorrect

C)  Correct                                Correct

D)  Incorrect                              Incorrect

3.GTO Corporation purchased all of the common stock of Charger Company for $4 million. At the time, Charger reported total assets of $3 million and total liabilities of $1 million. At the acquisition date, the fair value of Charger’s assets was $3.5 million and the fair value of Charger’s liabilities was $1.3 million. What amount of goodwill should GTO report as a result of the acquisition and is it necessary for GTO to amortize the goodwill?

A)  $1.8 million                           Yes

B)  $1.8 million                          No

C)  $2.2 million                           No

D)  $2.2 million                           Yes

答案和详解如下：

1.According to the Financial Accounting Standards Board, what is the appropriate measurement basis for equipment used in the manufacturing process and inventory that is held for sale?

Equipment

Inventory

A)  Historical cost                      Historical cost

B)  Fair value                             Lower of cost or market

C)  Historical cost                      Lower of cost or market

D)  Fair value                             Historical cost

The correct answer was C)

Equipment is reported in the balance sheet at historical cost less accumulated depreciation. Inventory is reported in the balance sheet at the lower of cost or market.

2.Are the following statements about copyrights and patents acquired from an independent third party, correct or incorrect?

Statement #1 – Copyrights and patents are tangible assets that can be separately identified.
Statement #2 – Purchased copyrights and patents are amortized on a straight line basis over 30 years.

Statement #1

Statement #2

A)  Incorrect                              Correct

B)  Correct                                Incorrect

C)  Correct                                Correct

D)  Incorrect                              Incorrect

The correct answer was D)

Acquired copyrights and patents are intangible assets that can be separately identified. Identifiable intangible assets are amortized over their useful lives.

3.GTO Corporation purchased all of the common stock of Charger Company for $4 million. At the time, Charger reported total assets of $3 million and total liabilities of $1 million. At the acquisition date, the fair value of Charger’s assets was $3.5 million and the fair value of Charger’s liabilities was $1.3 million. What amount of goodwill should GTO report as a result of the acquisition and is it necessary for GTO to amortize the goodwill?

Goodwill

Amortization required

A)  $1.8 million                           Yes

B)  $1.8 million                          No

C)  $2.2 million                           No

D)  $2.2 million                           Yes

The correct answer was B)

The acquisition goodwill is equal to $1.8 million [$4 million purchase price – $2.2 million fair value of net assets acquired ($3.5 million assets at fair value – $1.3 million liabilities at fair value)]. Under IFRS or U.S. GAAP, goodwill is not amortized but is subject to an annual impairment test.