Intangible Assets and Amortization definitions Flashcards
Intangible Assets and Amortization definitions
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Intangible Asset
Long-term resource lacking physical substance, providing special rights or privileges to a business. Limited Life
Characteristic of an asset that is expected to provide benefits for a set period, after which it is amortized. Indefinite Life
Status of an asset with no foreseeable end to its useful economic benefit, requiring annual impairment testing. Amortization
Systematic allocation of the cost of an intangible asset with a limited life over its useful period. Straight-Line Method
Technique that spreads the cost of an asset evenly over its useful life, commonly used for amortization. Patent
Exclusive government-granted right to produce and sell an invention, typically lasting up to 20 years. Copyright
Legal protection for creative works, such as books or software, lasting 70 years beyond the creator's life. Trademark
Legal protection for symbols, brand names, or slogans, which may have finite or indefinite legal duration. Franchise
Privilege granted by a business to sell its products or use its branding, often with an indefinite useful life. License
Permission from a business or authority to use a product, service, or brand, sometimes with indefinite duration. Goodwill
Excess value paid in a company acquisition, reflecting intangible qualities like reputation or customer loyalty. Impairment
Reduction in the recorded value of an asset when its market value drops below its carrying amount. Research and Development Costs
Expenditures for creating new products or processes, required to be expensed as incurred, not capitalized. Amortization Expense
Income statement item representing the periodic allocation of an intangible asset's cost over its useful life.
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