Under Current Accounting Standards,how Should the Costs of Intangible Assets

question 64

Multiple Choice

Under current accounting standards,how should the costs of intangible assets with an indefinite life,such as goodwill,be treated?

• A) They should be reviewed annually for impairment.
• B) They should be reported on the statement of retained earnings in the year acquired.
• C) They should be amortized over a reasonable period of time not to exceed 40 years.
• D) They should be debited to an expense account entirely in the year in which acquired.

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Definitions:

Inventory Transfer

The process of moving goods from one location to another within the same business entity.

Cost of Goods Sold

Immediate expenses incurred in the production of a company’s merchandise, including labor and material costs.

Gross Profit

The difference between sales revenue and the cost of goods sold, before deducting overheads, payroll, taxation, and interest payments.

Consolidated Financial Statements

Financial statements that aggregate the financial position of a parent company and its subsidiaries into one document, showing the overall health of the corporate group.