Which of the Following Is INCORRECT About the Measurement of Purchased

question 26

Multiple Choice

Which of the following is INCORRECT about the measurement of purchased intangible assets?

• A) Purchased intangible assets are measured at cost, which is their fair value at acquisition.
• B) Cost includes the acquisition cost and all expenditures necessary to make the intangible asset ready for its intended use.
• C) If an intangible asset is acquired due to a government grant, the asset is not recognized in the accounting records as there is no cost to the entity receiving the intangible asset.
• D) The cost of the intangible received in a nonmonetary exchange is the fair value of the consideration given or the fair value of the intangible received, whichever is more clearly evident.

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Definitions:

Post-Closing

The final phase in the accounting cycle where accounts are prepared for the start of the next period, following the closing entries are made to reset temporary accounts.

Adjusted Trial Balance

A statement listing all accounts and their balances after adjustments, used to verify the equality of debits and credits before preparing financial statements.

Unadjusted Trial Balance

A preliminary list of all accounts and their balances used in accounting, before any adjustments are made for the closing entries.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity and operational efficiency.