Question

In: Accounting

Select all of the following statements about intangibles that are TRUE The cost of a purchased...

Select all of the following statements about intangibles that are TRUE

The cost of a purchased intangible includes the purchase price, legal fees and other incidental expenses Bond investments are considered intangibles

A company can capitalize legal costs associated with an internally created intangible asset

When amortizing an intangible asset, an accumulated amortization contra account is always used

Only limited life intangibles are regularly evaluated for impairment

Trademarks are considered the property of the company originating the trademark for 70 years

The useful life of an intangible is the period over which these assets will contribute to a company's cash flows

Expert Solution

Solution

The true statements are –

The cost of a purchased intangible includes the purchase price, legal fees and other incidental expenses.

When amortizing an intangible asset, an accumulated amortization contra account is always used.

Trademarks are considered the property of the company originating the trademark for 70 years

The useful life of an intangible is the period over which these assets will contribute to a company's cash flows

False statements –

Bond investments are considered intangibles

Explanation: bond investments are tangible assets. As these derive their value from contractual claims

Only limited life intangibles are regularly evaluated for impairment

This statement is incorrect, as goodwill is an intangible with indefinite life. Nevertheless, goodwill is tested for impairment.

A company can capitalize legal costs associated with an internally created intangible asset.

Research and development costs related to the internally developed intangible asset are not to be capitalized. The costs are difficult to assign to a specific intangible asset.

ekkarill92 answered 2 years ago

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