ACCT 551 Week 4 Midterm (Version 2)

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1. Question: (TCO C) The cost of an intangible asset includes all of the following except
2. Question: (TCO C) Wriglee, Inc. went to court this year and successfully defended its patent from infringement by a competitor…………
3. Question: (TCO C) Negative goodwill arises when the _____ of the net assets acquired is higher than the purchase price of the assets.
4. Question: (TCO C) ELO Corporation purchased a patent for $90,000 on September 1, 2008. It had a useful life of 10 years. On January 1, 2010, ELO spent $22,000 to successfully defend the patent in a lawsuit. ELO feels that as of that date, the remaining useful life is 5 years. What amount should be reported for patent amortization expense for 2010?
5. Question: (TCO C) General Products Company bought Special Products Division in 2010 and appropriately recorded $500,000 of goodwill related to the purchase. On December 31, 2011, the fair value of Special Products Division is $4,000,000 and it is carried on General Products’ books for a total of $3,400,000, including the goodwill. An analysis of Special Products Division’s assets indicates that goodwill of $400,000 exists on December 31, 2011…………. General Products in 2011?
6. Question: (TCO D) An employee’s net (or take-home) pay is determined by gross earnings minus amounts for income tax withholdings and the employee’s
7. Question: (TCO D) Which gives rise to the requirement to accrue a liability for the cost of compensated absences?
8. Question: (TCO D) Which of the following is not acceptable treatment for the presentation of current liabilities?
9. Question: (TCO D) Jenkins Corporation has $2,500,000 of short-term debt it expects to retire with proceeds from the sale of 75,000 shares of common stock………. excluded from current liabilities?
10. Question: (TCO D) Tender Foot, Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that it may lose the case. The attorneys estimated that there is a 40% chance of losing. Tender Foot’s attorney estimated that if it loses, then the amount of any payment would be $500,000……… this litigation?
11. Question: (TCO D) Reich, Inc. issued bonds with a maturity amount of $200,000 and a maturity 10 years from date of issue…….. indicates that
12. Question: (TCO D) If bonds are issued between interest dates, the entry on the books of the issuing corporation could include a
13. Question: (TCO D) On January 1, 2010, Ellison Co. issued 8-year bonds with a face value of $1,000,000 and a stated interest rate of 6%, payable semiannually on June 30 and December 31……. Table values are as follows:
14. Question: (TCO D) A company issues $5,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2010. ……….. recognized in 2010?
15. Question: (TCO D) On January 1, Martinez Inc. issued $3,000,000, 11% bonds for $3,195,000. The market rate of interest for these bonds is 10%. Interest is payable annually on December 31. Martinez uses the effective-interest method of amortizing bond premium. At the end of the first year, Martinez should report unamortized bond premium of

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1. Question: (TCO C) Intangible assets may be internally generated or purchased from another party…………. in the initial valuation of the asset is an issue.
2. Question: (TCO C) Under what circumstances is it appropriate to record goodwill in the accounts? ………… off in accordance with generally accepted accounting principles?
3. Question: (TCO D) Irving Music Shop gives its customers coupons redeemable for a poster plus a Dixie Chicks CD. One coupon is issued for each dollar of sales……….. Irving Music Shop bought 20,000 posters at $2.00/poster and 20,000 CDs at $6.00/CD.
4. Question: (TCO D) On January 1, 2011, Piper Co. issued 10-year bonds with a face value of $1,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31………… Table values are:
5. Question: (TCO D) Prepare journal entries to record the following retirement. (Show computations and round to the nearest dollar). The December 31, 2010 balance sheet of Wolfe Co. included the following items:
   7.5% bonds payable due December 31, 2018     $1,200,000
   Unamortized discount on bonds payable            48,000
   …………… (Use straight-line amortization) On April 1, 2011, Wolfe retired $240,000 of these bonds at 101 plus accrued interest.