ACG 2021 Exam 3 Review Chapters 7 and 9

A long-term asset is recorded at the:

• Cost of the asset.

• Additional costs to get the asset ready for use.

• Cost of the asset plus all costs necessary to the asset ready for use.

• Cost of the asset less all costs necessary to the asset ready for use.

To capitalize an expenditure means to record the expenditure as a(n):

• Asset.

• Dividend.

• Expense.

• Liability.

What is the total capitalized cost of the land?

• $80,000

• $100,800

• $106,000

• $102,000

Which of the following expenditures should be recorded as an asset?

• Depreciation during the first year of an existing building.

• Repair of a machine.

• Property taxes incurred on an existing building.

• Architecture fees during the construction period of a new building.

An exclusive 20-year right to manufacture a product or to use a process is a:

• Trademark.

• Patent.

• Copyright.

• Franchise.

Which of the following is properly recorded as an intangible asset?

• A piece of land.

• An internally developed trademark.

• An internally developed copyright.

• A purchased patent.

Which of the following is **not** reported as an intangible asset in the balance sheet?

• Goodwill.

• Patents.

• Research and development.

• Trademarks.

Research and development costs:

• Should be included in the cost of the patent they relate to.

• Should be expensed.

• Are capitalized and then amortized.

• Are recorded as research and development assets.

Bryer Company purchases all of the assets and liabilities of Stellar Company for $1,500,000. The fair value of Stellar’s assets is $2,000,000, and its liabilities have a fair value of $1,200,000. The book value of Stellar’s assets and liabilities are not known. For what amount would Bryer record goodwill associated with the purchase?

• $700,000.

• $800,000.

• $0.

• $500,000.

Which of the following expenditures should be capitalized?

• An improvement to a tangible asset.

• Unsuccessful legal defense of an intangible asset.

• Ordinary repairs and maintenance.

• Research and development costs.