Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

8. Long Lived Assets

Intangible Assets and Amortization

Financial Accounting

8. Long Lived Assets

Intangible Assets and Amortization

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Multiple Choice

Which of the following properly describes the accounting for a patent?

A patent is expensed immediately when acquired.

A patent is recorded as an intangible asset and amortized over its useful life, not exceeding its legal life.

A patent is not recognized on the balance sheet until it is sold.

A patent is recorded as a tangible asset and depreciated over its legal life.

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Verified step by step guidance

Understand the nature of a patent: A patent is an intangible asset that provides exclusive rights to an invention or process for a specific period, typically granted by a government authority.

Determine how patents are accounted for: Intangible assets like patents are recorded on the balance sheet when acquired, as they have future economic benefits.

Recognize the treatment of costs: The cost of acquiring a patent is capitalized, meaning it is recorded as an asset rather than expensed immediately.

Understand amortization: Patents are amortized over their useful life, which cannot exceed their legal life. Amortization is the systematic allocation of the cost of the intangible asset over its useful life.

Clarify incorrect options: A patent is not expensed immediately, nor is it treated as a tangible asset. It is recognized on the balance sheet when acquired, not when sold.