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Intangibles with finite lives that can be
measured are amortized.
7.6-3 Amortization is usually computed on a
units-of-production basis.
7.6-4 Goodwill is recognized only when the purchase price exceeds
the value of the net liabilities in the acquisition of another company.
7.6-5 Goodwill may arise when the purchaser buys another company
that has higher than normal earning power.
7.6-6 A trademark may have an indefinite life and,
therefore, not be amortized.
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7.6-7 Research and
development costs are expensed over their useful or legal life.
7.6-8 If at the end of the year, goodwill is worth more than at
the beginning of the year, then an entry must be made to increase the goodwill.
7.6-9 Amortization is most closely associated with
which asset?
A) Copyright
B) Building
C) Natural
gas lease
D) All of the
above
7.6-10 Which of the following statements regarding
intangible assets is NOT true?
A) Intangible
assets are long-lived assets with no physical form.
B) Intangible
assets are recorded at their acquisition cost.
C) Intangible
assets with a finite life are not amortized.
D) Intangible
assets with an indefinite life are not amortized.
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7.6-11 Amortization
expense:
A) is the
title of the expense associated with natural resources.
B) is
recorded for intangible assets with a finite life.
C) is
recorded for assets with an indefinite life.
cannot be credited directly to the asset account
