INTERMEDIATE ACCOUNTING EXAM 6

General Rule: Please, read all the questions properly, observe carefully the problems, and answer the
following with intelligence. You must put your solutions at the back of the paper, which is written clearly and
readable. WARNING! Cheating is not allowed, being caught on act of cheating that person/s will face a great
consequence. (10 Points)

1. Directly attributable costs of preparing the intangible asset for its intended use include all of the
following, except
A. Cost of employee benefits arising directly from bringing the asset to its working condition
B. Professional fees arising directly from bringing the asset to its working condition
C. Cost of testing whether the asset is functioning properly
D. Initial operating losses

2. Which is incorrect concerning acquisition of an intangible asset as part of a business combination?

A. The cost of the intangible asset is based on its fair value at the date of acquisition.
B. If there is an active market from the intangible asset, the fair value is equal to the quoted market price
which is usually the current bid price.
C. If there is no active market for the intangible asset, the fair value is equal to the amount that would be
paid by the entity in an arm's length transaction between knowledgeable and willing parties.
D. If an intangible asset acquired in a business combination is separable or arises from contractual or legal
rights, sufficient information does not exist to measure reliably the fair value of the asset.

3. Which of the following statements in relation to intangible assets acquired in a business combination
is true?
I. Intangible assets acquired in business combination shall only be recognized if they have already been
recognized by the entity being acquired.
II. Intangible assets acquired in a business combination shall not be recognized separately from
goodwill.
A. I only C. Both I and II
B. II only D. Neither I nor II
4. An intangible asset acquired by way of government grant may be initially recorded at
I. Fair value
II. Nominal amount or zero, plus any expenditure that is directly attributable to preparing the asset for its
intended use.
A. I only
B. II only
C. Either I or II
D. Neither I nor II
 5. Goodwill shall be recognized only when
A. It is purchased from another entity.
B. It can be established that a definite benefit or advantage has resulted to an entity from some item such as a good
name, capable staff, or reputation
C. It is acquired through the purchase of another business entity.
D. An entity reports above normal earnings for five or more consecutive years.