Acct 551 Quiz Week 1

Topics: Stock, Income statement, Discounted cash flow Pages: 2 (309 words) Published: October 11, 2014
1. (TCO C) Which of the following should not be reported in the income statement? (Points : 5)        Goodwill amortization
       Trade name amortization expense
       Patent impairment losses
       All of the above

Question 2. 2. (TCO C) Which of the following costs incurred with developing computer software for internal use should be capitalized? (Points : 5)        Evaluation of alternatives
Question 3. 3. (TCO C) Mini Corp. acquires a patent from Maxi Co. in exchange for 2,500 shares of Mini Corp.’s $5 par value common stock and $75,000 cash. When the patent was initially issued to Maxi Co., Mini Corp.’s stock was selling at $7.50 per share. When Mini Corp. acquired the patent, its stock was selling for $9 a share. Mini Corp. should record the patent at what amount? (Points : 5)        $87,500

Question 4. 4. (TCO C) On January 2, 2011, Klein Co. bought a trademark from Royce, Inc. for $1,000,000. An independent research company estimated that the remaining useful life of the trademark was 10 years. Its unamortized cost on Royce’s books was $800,000. In Klein’s 2011 income statement, what amount should be reported as amortization expense? (Points : 5)        $100,000

Question 5. 5. (TCO C) Harrel Company acquired a patent on an oil extraction technique on January 1, 2010 for $5,000,000. It was expected to have a 10-year life and no residual value. Harrel uses straight-line amortization for patents. On December 31, 2011, the future cash flows from the patent were expected to be $600,000 per year for the next 8 years. The present value of these cash flows, discounted at Harrel’s market value of these cash flows, and discounted at Harrel’s market interest rate, is $2,800,000. At what amount should the patent be carried on the December 31, 2011 balance sheet? (Points : 5)        $5,000,000...
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