ACCOUNTING

 60. Goodwill is the amount by which a company’s value exceeds the value of its individual assets and liabilities.

 

61. The cost of an intangible is systematically allocated to expense over its estimated useful life through the process of depletion.

 

62. Since goodwill is an intangible, it is amortized each year using the straight-line method, the same as other intangibles are amortized.


63. A patent is an exclusive right granted to its owner to manufacture and sell a patented device or to use a process for 20 years.

 

64. A copyright gives its owner the exclusive right to publish and sell a musical, literary, or artistic work during the life of the creator plus 17 years.

65. The cost of developing, maintaining, or enhancing the value of a trademark is always added to the value of the asset when incurred.

 

 

 

Multiple Choice Questions

66. Plant assets are:
A. Tangible assets used in the operation of a business that have a useful life of more than one accounting period.
B. Current assets.
C. Held for sale.
D. Intangible assets used in the operations of a business that have a useful life of more than one accounting period.
E. Tangible assets used in the operation of business that have a useful life of less than one accounting period.

 

 67. A main accounting issue for plant assets is:
A. Computing the cost of the plant assets.
B. Matching the costs of plant assets against revenues for the periods they benefit.
C. Accounting for repairs and improvements to plant assets.
D. The disposal of plant assets.
E. All of these.

 

 

68. Plant assets are:
A. Current assets.
B. Used in operations.
C. Natural resources.
D. Long-term investments.
E. Intangible.

 

69. The relevant factor(s) in computing depreciation include:
A. Cost.
B. Salvage value.
C. Useful life.
D. Depreciation method.
E. All of these.

70. Salvage value is:
A. Also called residual value.
B. Also called scrap value.
C. An estimate of the asset’s value at the end of its benefit period.
D. A factor relevant to determining depreciation.
E. All of these.

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