Indicate Whether Each of the Following Statements Is True or False

question 46

Short Answer

Indicate whether each of the following statements is true or false.
_____ a) A trademark has an indefinite legal lifetime.
_____ b) U.S. GAAP requires that research and development costs be capitalized as assets and then expensed over a reasonable period of time.
_____ c) A patent is amortized over the longer of its legal or useful life.
_____ d) The entry to record the amortization of a patent includes a debit to Amortization Expense, Patent and a credit to Patent.
_____e) The capitalized cost of a trademark includes the cost to develop the trademark and to defend it.

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Definitions:

Elastic

Describes demand that is highly sensitive to changes in price, meaning that quantity demanded can significantly increase or decrease as prices change.

Average Cost

The total cost of production divided by the number of goods produced, representing the per-unit cost.

Marginal Revenue

The boosted income realized by vending one extra unit of a good or service.

Natural Monopoly

Firm that can produce the entire output of the market at a cost lower than what it would be if there were several firms.