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:

Variable Cost

Expenses that vary depending on the amount of products or services a company generates.

Fixed Costs

Expenses that do not vary with the volume of production or sales, such as rent, salaries, and insurance premiums.

Cash Flow

The full measure of money movement into and out of an organization, primarily altering its liquidity status.

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows, reflecting the risk and time value of money.