Indicate Whether Each of the Following Statements Is True or False

question 34

Short Answer

Indicate whether each of the following statements is true or false.
_____ a) A patent with a useful life of 5 years and a legal life of 10 years is amortized over 10 years.
_____ b) Intangible assets with indefinite useful lives must be tested each year for impairment.
_____ c) If it is determined that the original value recorded for goodwill is too high, then an entry is made directly to Retained Earnings, reducing the balance in this account.
_____ d) The entry to recognize an impairment loss on goodwill includes a debit to Impairment Loss and a credit to Goodwill.
_____ e) The recognition of an impairment loss involves a cash outflow classified as a financing activity.

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Definitions:

Health Care Spending Accounts

Accounts that allow employees to set aside pre-tax dollars to pay for eligible health care expenses not covered by their insurance.

Fixed Benefits Plan

A type of employee benefits plan where the benefits provided are predetermined and not based on individual performance or company profitability.

Defined Benefit Plan

A pension plan that guarantees a specified monthly benefit at retirement, which is predetermined by a formula based on the employee's earnings history, tenure of service, and age.

Annual Pension

A financial arrangement that provides individuals with a regular payment during retirement, typically based on years of service and salary history.