FAR 3.7 - Intangibles

Question 1

Long-lived legal rights and competitive advantages developed or acquired by aa business enterprise:

Answer 1

Intangible assets

Question 2

Intangible assets acquired from other enterprises or individuals should be recorded as an asset at:

Answer 2

Cost

Question 3

The general rule for Internally developed intangible assets is that they should be :

Answer 3

Expensed

Question 4

An exception to the general rule that internally developed intangible assets should be expensed is that certain costs associated with internally developed intangibles that are specifically identifiable can be capitalized such as:

Answer 4

Legal fees related to a successful defense
Registration or consulting fees
Design costs
Other direct costs to secure the asset

Question 5

If an intangible asset is sold, the G or L is calculated as:

Answer 5

Carrying value - selling price

Question 6

Finite life intangible assets are reported at:
Indefinite life intangible assets are reported at:

Answer 6

Finite: cost - amortization and impairment
Indefinite: cost - impairment

Question 7

Start up costs are expensed and they include costs associated with:

Answer 7

Organizing a new entity
Opening a new facility
Introducing a new product
Conducting business in a new territory
Initiating aa new process in an existing facility

Question 8

The general rule is that research and development costs are expensed, however there are two exceptions:

Answer 8

1. Materials, equipment, and facilities with alternative future uses are capitalized
2. R&D costs undertaken on behalf of others under a contractual agreement are capitalized

Question 9

Costs incurred until technological feasibility had been established for the Computer software developed to be sold, leased, or licensed are:

Answer 9

Expensed

Question 10

Costs incurred after technological feasibility has been established for the Computer software developed to be sold, leased, or licensed up until the product is sold are:

Answer 10

Capitalized

Question 11

Technological feasibility is established upon completion of:

Answer 11

A detailed program design or working model

Question 12

Annual amortization of capitalized software costs is calculated as the greater of:

Answer 12

1. Total capitalized amount / estimated economic life
   Or
2. Total capitalized amount X (gross revenue for period / total projected gross revenue of product)

Question 13

Costs incurred for the preliminary project state and costs incurred for training and maintenance for Computer software developed internally or obtained only for internal use are:

Answer 13

Expensed

Question 14

Costs incurred after the preliminary project state and for upgrades and enhancements for Computer software developed internally or obtained only for internal use are:

Answer 14

Capitalized

Question 15

If software previously developed for internal use is subsequently sold to outsiders, proceeds received should be:

Answer 15

First applied to the carrying amount of the software
Then the remainder is recognized as revenue