Asked by Cianna Rodriguez on Jun 11, 2024
Verified
Which of the following statements best describes the accounting treatment of Intangible Assets with indefinite lives?
A) All intangible assets are written down when their carrying values exceed their fair market values.
B) With the exception of Goodwill, all intangible assets are written down when their carrying values exceed their fair market values.
C) All intangible assets are written down when their carrying values exceed their undiscounted future cash flows.
D) The recoverable amount is determined and compared to the carrying amount. If the recoverable amount is greater than the carrying amount than no impairment exists; otherwise, there is an impairment and the asset is written down to its recoverable amount.
Intangible Assets
Non-physical assets such as patents, copyrights, trademarks, software, and goodwill that have value to a business.
Goodwill
The excess value of the purchase price over the fair market value of the assets acquired and liabilities assumed in a business combination.
Recoverable Amount
The higher of an asset's fair value less costs to sell and its value in use. It's the estimated amount an entity can obtain from an asset's use or sale, covering its carrying amount.
- Recognize the management of intangible assets that have indefinite lifespans and the assessments used to determine their impairment.
Verified Answer
Learning Objectives
- Recognize the management of intangible assets that have indefinite lifespans and the assessments used to determine their impairment.
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