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Questions and Answers
What is the classification of 'investment in a subsidiary company'?
What is the classification of 'investment in a subsidiary company'?
- Long-term investment (correct)
- PP&E
- R&D expense
- Intangible
What is the classification of 'Timberland'?
What is the classification of 'Timberland'?
- Expense
- R&D expense
- Long-term investment
- PP&E (correct)
What is the classification of the 'cost of engineering activity required to advance the design of a product to the manufacturing stage'?
What is the classification of the 'cost of engineering activity required to advance the design of a product to the manufacturing stage'?
- Long-term investment
- Intangible
- Expense
- R&D expense (correct)
What is the classification of 'lease payment'?
What is the classification of 'lease payment'?
What is the classification of the 'cost of equipment obtained'?
What is the classification of the 'cost of equipment obtained'?
What is the classification of the 'cost of searching for applications of new research findings'?
What is the classification of the 'cost of searching for applications of new research findings'?
What is the classification of the 'cost incurred in the formation of a corporation'?
What is the classification of the 'cost incurred in the formation of a corporation'?
What is the classification of 'operating losses incurred in the start-up of a business'?
What is the classification of 'operating losses incurred in the start-up of a business'?
What is the classification of 'training costs incurred in startup of a new operation'?
What is the classification of 'training costs incurred in startup of a new operation'?
What is the classification of the 'purchase cost of a franchise'?
What is the classification of the 'purchase cost of a franchise'?
What is the classification of 'goodwill generated internally'?
What is the classification of 'goodwill generated internally'?
What is the classification of the 'cost of testing in search of product alternatives'?
What is the classification of the 'cost of testing in search of product alternatives'?
What is the classification of 'goodwill acquired in the purchase of a business'?
What is the classification of 'goodwill acquired in the purchase of a business'?
What is the classification of the 'cost of developing a patent'?
What is the classification of the 'cost of developing a patent'?
What is the classification of the 'cost of purchasing a patent from an inventor'?
What is the classification of the 'cost of purchasing a patent from an inventor'?
What is the classification of 'legal costs incurred in securing a patent'?
What is the classification of 'legal costs incurred in securing a patent'?
What is the classification of 'unrecovered costs of a successful legal suit to protect the patent'?
What is the classification of 'unrecovered costs of a successful legal suit to protect the patent'?
What is the classification of the 'cost of conceptual formulation of possible product alternatives'?
What is the classification of the 'cost of conceptual formulation of possible product alternatives'?
What is the classification of the 'cost of purchasing a copyright'?
What is the classification of the 'cost of purchasing a copyright'?
What is the classification of 'research and development costs'?
What is the classification of 'research and development costs'?
What is the classification of 'long-term receivables'?
What is the classification of 'long-term receivables'?
What is the classification of the 'cost of developing a trademark'?
What is the classification of the 'cost of developing a trademark'?
What is the classification of the 'cost of purchasing a trademark'?
What is the classification of the 'cost of purchasing a trademark'?
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Study Notes
Investment Classifications
- Long-term investment includes investments in subsidiary companies.
- Prepaid rent classifies lease payments made in advance.
Property, Plant, and Equipment (PP&E)
- Timberland and equipment costs fall under PP&E classification.
Research & Development (R&D) Expenses
- Costs related to engineering activities for product design transition are categorized as R&D expenses.
- Searching for new applications from research findings incurs R&D expense classification.
- Testing costs for exploring product alternatives are also classified under R&D expenses.
- Developing costs associated with patents is treated as an R&D expense.
- Conceptual formulation costs for possible product alternatives are classified under R&D expenses.
- Research and development overall costs are classified as R&D expenses.
Intangible Assets
- Purchase costs of franchises, patents from inventors, copyrights, and trademarks are classified as intangible assets.
- Goodwill generated from business acquisition is classified as intangible, while internally generated goodwill is not recorded.
- Legal costs incurred for patent security and unrecovered costs from patent litigation qualify as intangible assets.
Other Expenses and Losses
- Costs associated with starting a business, such as operating losses and training costs, are classified as expenses.
- Developing a trademark incurs an expense classification.
Long-Term Receivables
- Long-term investments can also include long-term receivables.
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