Asked by Kaitlyn Munger on Apr 28, 2024
Verified
The cost of an internally developed unidentifiable intangible is expensed as incurred.Accordingly, which one of the following costs would be expensed in the year it was incurred?
A) legal cost of obtaining a patent
B) cost of improvements with a three-year life made to an asset that is being leased by the company for a five-year period
C) deferred charges
D) cost incurred to train management-level employees
Internally Developed
Refers to assets or processes that a company develops using its own resources and without external acquisition.
Unidentifiable Intangible
An intangible asset that lacks physical substance and cannot be easily separated or identified from the business itself.
- Comprehend the guidelines for when to capitalize or expense the costs incurred in the development, acquisition, or protection of intangible assets.
Verified Answer
ZK
Zybrea KnightMay 03, 2024
Final Answer :
D
Explanation :
The cost incurred to train management-level employees is a general training expense and not related to any identifiable intangible asset. Therefore, it should be expensed as incurred. The legal cost of obtaining a patent would be capitalized as part of the cost of obtaining the patent. The cost of improvements with a three-year life made to an asset that is being leased would be capitalized and amortized over the useful life of the asset. Deferred charges would be capitalized and amortized over their useful life.
Learning Objectives
- Comprehend the guidelines for when to capitalize or expense the costs incurred in the development, acquisition, or protection of intangible assets.
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