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Answer the following multiple-choice questions:   1

Accounting

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Answer the following multiple-choice questions:

 

1.    Indefinite-life intangible assets are not amortised.

A.   True

B.   False

 

2.    Indefinite-life intangible assets are tested for impairment at least once annually.

A.   True

B.   False

 

 

3.    Astro plc holds the items listed below. Which one(s) should be accounted as intangible assets (according to IAS 38) in Astro plc's financial statements?

A.   A patent that Astro purchased from Saturn plc one year ago

B.   The brand of a very popular product that Astro developed in-house over the last ten years

C.   Brands that Astro obtained from the acquisition of Velcro plc 2 years ago

D.   Goodwill on the acquisition of Velcro plc

E.   The knowledge acquired through Astro's research activities

F.    A loan provided by Astro to Roaming plc

G.   Astro's reputation

 

4.    Entities can always recognise their development expenditure as an intangible asset according to IAS 38.

A.   True

B.   False

 

5.    Investments in advertising are not recognised as intangible assets according to IAS 38.

A.   True

B.   False

 

6.    Which of the following statements about intangible assets is/are incorrect:

(i)            Intangible assets typically have zero residual value

(ii)          The reducing balance method is often utilised to amortise intangible assets over their useful life

(iii)         Entities can choose to measure their intangible assets at fair value after initial recognition, if certain conditions are met

(iv)         An intangible asset can only be recognised on balance sheet if its cost can be measured reliably

 

A.   (i) only

B.   (ii) only

C.   (iii) only

D.   (iv) only

E.   (i) and (ii)

F.    (ii) and (iii)

G.   (iii) and (iv)

H.   (i) and (iv)

 

7.    During the year ending 31 December 20X1, Entity A invested £60,000 in research activities and £30,000 in development activities. The development costs meet the IAS 38 criteria for recognition as an intangible asset and Entity A amortises them on a straight-line basis over 10 years, with zero residual value.

Entity A invested a further £50,000 in research activities during the year ending 31 December 20X2.

 What is the amount of R&D expenses recognised in Entity A's income statement for the year ending 31 December 20X2?

(i)            £3,000

(ii)          £35,000

(iii)         £50,000

(iv)         £53,000

(v)          £85,000

(vi)         £113,000

(vii)        £140,000

 

A.   (i)

B.   (ii)

C.   (iii)

D.   (iv)

E.   (v)

F.    (vi)

G.   (vii)