16.6 Learning Objective 16-6
1) Amortization of a patent was ignored. This error would cause:
A) the period’s net income to be overstated.
B) the period’s net income to be understated.
C) the period end assets to be understated.
D) None of these are correct.
2) The credit portion of the adjustment for the depletion of a coal mine was credited to the Coal Mine
account. This error would cause:
A) the period’s net income to be overstated.
B) the period’s net income to be understated.
C) the period end assets to be overstated.
D) None of these are correct.
3) An example of an intangible asset is:
A) a patent.
B) a building.
C) assembly cost.
D) land.
4) A company purchases a patent for $50,000. The patent will be amortized over 5 years. The entry to
record the amortization in the first year is:
A) debit Patents $50,000; credit Cash $50,000.
B) debit Amortization of Patents $10,000; credit Patents $10,000.
C) debit Amortization of Patents $50,000; credit Patents $50,000.
D) debit Patents $10,000; credit Amortization of Patents $10,000.
5) The process of writing off an intangible asset is:
A) depreciation.
B) depletion.
C) amortization.
D) None of these answers are correct.
6) The exclusive right to produce and sell a manuscript is called a:
A) copyright.
B) franchise.
C) patent.
D) goodwill.
7) The allocation of the cost of a natural resource is:
A) depreciation.
B) depletion.
C) amortization.
D) accrual.
8) Intellectual property assets are:
A) depreciated.
B) depleted.
C) amortized.
D) expensed.
9) All of the following are intangible assets except:
A) patents.
B) copyrights.
C) franchises.
D) accounts receivable.
10) A manufacturer or seller of a product may identify its merchandise and bar others from using the
same identification by getting a:
A) franchise.
B) trademark.
C) patent.
D) copyright.
11) The write-off of intangible assets is called:
A) depreciation.
B) amortization.
C) depletion.
D) deterioration.
12) A coal mine was acquired for $2,000,000. No salvage value was expected and the number of tons of
coal is estimated to be 2,000,000 tons. During for first year, 220,000 tons of coal was mined and sold. The
depletion expense is:
A) $2,220,000.
B) $2,000,000.
C) $ 220,000.
D) $ 24,200.
13) To record the depletion of natural resources, the most common method is to use units–of -production
in determining the amount of depletion.
14) Patents, copyrights, and franchises are intangible assets with the same number of years of useful life.
15) Copyright protection expires upon the author’s death.
16) On January 1, 200x, Mayberry Company bought a patent for $20,000. Its estimated useful life is five
years. Record the amortization for the first two years.
17) If a coal deposit has 375,000 tons available and was purchased for $750,000, record the removal of
60,000 tons in year 1 and 80,000 tons in year 2.
18) The portion of an intangible asset’s cost that is recognized as an expense is ________.
19) The intangible that can have the longest life before renewal is a ________.
20)
Column 1
Column 2
Column 3
Column 4
Loss on goodwill
Column 1
Column 2
Column 3
Column 4
Loss on goodwill
expense
debit
income statement
temporary
21)
Column 1
Column 2
Column 3
Column 4
Coal deposit
Column 1
Column 2
Column 3
Column 4
Coal deposit
asset
debit
balance sheet
permanent
22)
Column 1
Column 2
Column 3
Column 4
Gain from sale of
plant asset
Column 1
Column 2
Column 3
Column 4
Gain from sale of
plant asset
revenue
credit
income statement
temporary
23)
Column 1
Column 2
Column 3
Column 4
Goodwill
Column 1
Column 2
Column 3
Column 4
Goodwill
asset
debit
balance sheet
permanent
24)
Column 1
Column 2
Column 3
Column 4
Loss from fire
Column 1
Column 2
Column 3
Column 4
Loss from fire
expense
debit
income statement
temporary
25)
Column 1
Column 2
Column 3
Column 4
Amortization of
patent
Column 1
Column 2
Column 3
Column 4
Amortization of
patent
expense
debit
income statement
temporary
26)
Column 1
Column 2
Column 3
Column 4
Depletion of coal
mine
Column 1
Column 2
Column 3
Column 4
Depletion of coal
mine
expense
debit
income statement
temporary
27)
Column 1
Column 2
Column 3
Column 4
Franchise
Column 1
Column 2
Column 3
Column 4
Franchise
asset
debit
balance sheet
permanent
28)
Column 1
Column 2
Column 3
Column 4
Accumulated
depletion coal
mine
Column 1
Column 2
Column 3
Column 4
Accumulated
depletion coal
mine
asset
credit
balance sheet
permanent
29)
Column 1
Column 2
Column 3
Column 4
Copyright
Column 1
Column 2
Column 3
Column 4
Copyright
asset
debit
balance sheet
permanent
30)
Column 1
Column 2
Column 3
Column 4
Loss on disposal
of plant asset
Loss on disposal
31)
Column 1
Column 2
Column 3
Column 4
Patent
Patent
debit
balance sheet
permanent
32)
Column 1
Column 2
Column 3
Column 4
Depreciation
expense
Depreciation
33)
Column 1
Column 2
Column 3
Column 4
Accumulated
depreciation
Column 1
Column 2
Column 3
Column 4
Accumulated
depreciation
asset
credit
balance sheet
permanent
34)
Column 1
Column 2
Column 3
Column 4
Machinery
Column 1
Column 2
Column 3
Column 4
Machinery
asset
debit
balance sheet
permanent
35)
Column 1
Column 2
Column 3
Column 4
Land
improvements
Column 1
Column 2
Column 3
Column 4
Land
improvements
asset
debit
balance sheet
permanent
36)
Column 1
Column 2
Column 3
Column 4
Building
Column 1
Column 2
Column 3
Column 4
Building
asset
debit
balance sheet
permanent
37)
Column 1
Column 2
Column 3
Column 4
Land
Column 1
Column 2
Column 3
Column 4
Land
asset
debit
balance sheet
permanent
38)
Column 1
Column 2
Column 3
Column 4
Cash
Column 1
Column 2
Column 3
Column 4
Cash
asset
debit
balance sheet
permanent
39) The three categories of writing off plant assets, natural resources, and intangible assets are ________,
________, and ________.