Multiple Choice
If an intangible asset has an indefinite useful life, it is not amortized. Which of the following best completes the sentence?
158
views
8. Long Lived Assets
Intangible Assets and Amortization
Multiple Choice
In the balance sheet, patents and copyrights are most appropriately classified as which type of asset?
A
Property, plant, and equipment (tangible fixed assets)
B
Intangible assets
C
Long-term investments (marketable securities)
D
Current assets (inventory)
Verified step by step guidance1
Understand the classification of assets on the balance sheet, which generally includes current assets, property, plant, and equipment (tangible fixed assets), intangible assets, and long-term investments.
Recognize that patents and copyrights are non-physical assets that provide legal rights or exclusive benefits to a company, which means they do not have a physical substance like machinery or buildings.
Recall that intangible assets are defined as identifiable non-monetary assets without physical substance, such as patents, copyrights, trademarks, and goodwill.
Eliminate other options: property, plant, and equipment are tangible assets; current assets are short-term and usually include cash, inventory, and receivables; long-term investments are financial assets held for investment purposes.
Conclude that patents and copyrights are most appropriately classified as intangible assets on the balance sheet.
Related Videos
Related Practice
