Which of the following statements is true regarding intangible assets?
A.
The amortization period of an intangible asset cannot exceed 20 years.
B.
The cost intangible assets with indefinite lives should be amortized.
C.
Intangible assets are categorized as having either a limited life or an indefinite life.
D.
Companies should record intangible assets at fair market value
The Answer Is:
C
This question includes an explanation.
Explanation:
Intangible assets are indeed categorized as having either a limited life or an indefinite life. Those with a limited life are amortized over their useful life, whereas those with indefinite lives, such as some types of intellectual property, are not amortized but must be tested annually for impairment. This categorization helps in the appropriate financial treatment of intangible assets under accounting standards. References: Financial Accounting Standards Board (FASB) and International Financial Reporting Standards (IFRS) regarding the treatment of intangible assets.
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