Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

8. Long Lived Assets

Intangible Assets and Amortization

Financial Accounting

8. Long Lived Assets

Intangible Assets and Amortization

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Multiple Choice

How do intangible assets with limited useful lives differ from those with indefinite useful lives in terms of accounting treatment?

Intangible assets with indefinite lives are amortized, while those with limited lives are not.

Both types of intangible assets are amortized over a fixed period regardless of their useful life.

Intangible assets with limited lives are amortized over their useful life, while those with indefinite lives are not amortized but are tested annually for impairment.

Neither type of intangible asset is subject to amortization or impairment testing.

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Verified step by step guidance

Understand the concept of intangible assets: Intangible assets are non-physical assets that provide economic benefits to a company, such as patents, trademarks, copyrights, and goodwill.

Differentiate between limited useful lives and indefinite useful lives: Intangible assets with limited useful lives have a defined period during which they are expected to generate economic benefits, while those with indefinite useful lives do not have a foreseeable limit to their economic benefit period.

Accounting treatment for limited useful lives: Intangible assets with limited useful lives are amortized over their useful life. Amortization is the systematic allocation of the asset's cost over its useful life, similar to depreciation for tangible assets.

Accounting treatment for indefinite useful lives: Intangible assets with indefinite useful lives are not amortized because there is no predictable end to their economic benefit period. Instead, they are tested annually for impairment to ensure their carrying value does not exceed their recoverable amount.

Summarize the key difference: The primary distinction is that intangible assets with limited useful lives are amortized over their useful life, while those with indefinite useful lives are not amortized but are subject to annual impairment testing.