Question 1 When a company develops a trademark the costs directly related to sec

Question

Question 1

When a company develops a trademark the costs directly related to securing, it should generally be capitalized. Which of the following costs associated with a trademark would not be allowed to be capitalized?

Question 1 options:

A. Attorney fees

B. Consulting fees

C. Research and development fees

D. Design costs

Question 2

When developing computer software to be sold, which of the following costs should be capitalized?

Question 2 options:

Designing

Coding

Testing

None of the above

Question 3

Which of the following costs of goodwill should be amortized over their estimated useful lives?

Question 3 options:

Neither costs of goodwill from a business combination nor costs of developing goodwill internally

Not costs of goodwill from a business combination but costs of developing goodwill internally

Both costs of goodwill from a business combination and costs of developing goodwill internally

Costs of goodwill from a business combination but costs of developing goodwill internally

Question 4

Purchased goodwill should ________.

Question 4 options:

be written off as soon as possible against retained earnings

be written off as soon as possible as an extraordinary item

be written off by systematic charges as a regular operating expense over the period benefited

not be amortized

Question 5

Which of the following principles best describes the current method of accounting for research and development costs?

Question 5 options:

Associating cause and effect

Systematic and rational allocation

Income tax minimization

Immediate recognition as an expense

A. Attorney fees

B. Consulting fees

C. Research and development fees

D. Design costs

Explanation / Answer

1.

Answer: C

Research and development (R & D) fees should not be capitalized in this case; because this kind of cost basically required for overall development of the organization, but not for only trademark.

2.

Answer: D

Designing, coding, and testing, should not be capitalized since these are recurring in nature.

3.

Answer: A

There should not be any amortization of such cost for business combination and or for developing internally.

4.

Answer: D

It should not be amortized, since the goodwill is purchased in exchange of money. In general amortization is done where there is no cash spending, like depreciation, discount on issue of shares, etc.

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