Scheduled maintenance: Wednesday, February 8 from 10PM to 11PM PST
Upgrade to remove ads
Only $35.99/year

ACC 305 - Chapter 12

Terms in this set (32)

What are the 2 main characteristics of an intangible asset?
1. They lack physical existence
2. They are not financial instruments
Are intangible assets normally classifies as short-term or long-term assets?
long-term
Purchases intangibles are recorded at ________.
at cost. This includes purchase price, legal fees, and other incidental expenses. (all acquisition costs + expenditures ti make the intangible asset ready for its intended use)
The cost of intangibles acquired in exchange for stock or other assets is _______________ OR _________________, whichever is more clearly evident..
the fair value of the consideration given OR the fair value of the intangible received, whichever is more clearly evident.
___________ useful life intangibles get amortized.
___________ useful life intangibles DO NOT get amortized.
limited-life intangibles get amortized.
indefinite useful life intangibles DO NOT get amortized.
Companies should test indefinite-life intangibles for ___________________ at least annually.
Companies should test indefinite-life intangibles for impairment at least annually.
When doing the impairment test, there is no recoverability test for _______________________ intangibles.
When doing the impairment test, there is no recoverability test for indefinite-life intangibles.
_____________________ is measured as the excess of the cos of the purchase over the fair value of the identifiable net assets (assets less liabilities) purchased.
Goodwill is measured as the excess of the cos of the purchase over the fair value of the identifiable net assets (assets less liabilities) purchased.
______________________ is sometimes referred to as a plug, gap filler, or a master valuation account.
Goodwill is sometimes referred to as a plug, gap filler, or a master valuation account.
Goodwill generated ____________ should not be capitalized in the accounts.
Goodwill generated internally should not be capitalized in the accounts.
Internally created intangibles are recognized as ____________________ when incurred.
Internally created intangibles are recognized as expenses when incurred.
Only ______ _______ incurred in developing the intangible are capitalized.
Only direct costs incurred in developing the intangible are capitalized.
Example: Legal costs
Goodwill is recorded only when ______________________________________________.
Goodwill is recorded only when an entire business is purchased.
Goodwill is the _________________ - the excess of _________ over _______________ of the identifiable net asserts acquired.
Goodwill is the residual - the excess of cost over fair value of the identifiable net asserts acquired.
Companies adjust its carrying value only when goodwill is _____________.
Companies adjust its carrying value only when goodwill is impaired.
Company's brand name, customer relationships, patents, reputation, etc. are examples of __________________.
Company's brand name, customer relationships, patents, reputation, etc. are examples of goodwill.
Capitalized:
Capitalized: Taking cost, true expense, and turning it into an asset for a while.
Limited-Life Intangible: Customer-related
Purchased:
Created Internally:
Amortization:
Limited-Life Intangible: Customer-related
Purchased: Capitalize
Created Internally: Expense
Amortization: Over useful-life
Limited-Life Intangible: Artistic-related
Purchased:
Created Internally:
Amortization:
Limited-Life Intangible: Artistic-related
Purchased: Capitalize
Created Internally: Expense
Amortization: Over useful-life
Limited-Life Intangible: Contract-related
Purchased:
Created Internally:
Amortization:
Limited-Life Intangible: Contract-related
Purchased: Capitalize
Created Internally: N/A
Amortization: Over useful-life
Limited-Life Intangible: Technology-related
Purchased:
Created Internally:
Amortization:
Limited-Life Intangible: Technology-related
Purchased: Capitalize
Created Internally: Expense
Amortization: Over useful-life
Indefinite-Life Intangible: Marketing-related
Purchased:
Created Internally:
Amortization:
Indefinite-Life Intangible: Marketing-related
Purchased: Capitalize
Created Internally: Expense
Amortization: Do not amortize
Indefinite-Life Intangible: Contract-related
Purchased:
Created Internally:
Amortization:
Indefinite-Life Intangible: Contract-related
Purchased: Capitalize
Created Internally: N/A
Amortization: Do not amortize
Indefinite-Life Intangible: Goodwill
Purchased:
Created Internally:
Amortization:
Indefinite-Life Intangible: Goodwill
Purchased: Capitalize
Created Internally: N/A
Amortization: Do not amortize
Contract-related intangibles amortization periods:
For limited-life contracts:
For unlimited-life contracts:
Contract-related intangibles amortization periods:
For limited-life contracts: length of contract
For unlimited-life contracts: not amortized
Book value = ______________ value
Book value = carrying value
Goodwill =
purchase price - fair value of net assets

fair value of net assets = total fair value assets - current liabilities
Only record loss if ......
there is impairment
recoverability test:
recoverability test= carrying value - future net cash flows

If expected future net cash flows is less than carrying amount....
- yes: Impairment
- no: No Impairment
Impairment=
carrying value - future net cash flows
Impairment loss:
Impairment loss = carrying value - fair value
Impairment loss journal entry:

-------------------- XXX
-------------------- XXX
Loss on Impairment XXX
"Event" XXX
Other sets by this creator