What is Indefinite-lived intangible asset?
In short
An indefinite-lived intangible asset is one with no foreseeable limit on the period it will generate cash flows, such as a trademark that can be renewed indefinitely at little cost. It is not amortized but is tested for impairment at least annually.
Key takeaways
- The impairment loss is the carrying amount above fair value.
- If its life later becomes finite, it is amortized from then on.
- Goodwill is also not amortized by public companies, but it is tested at the reporting unit level.
Where it's tested
FAR: Intangible Assets & Goodwill — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A company acquires a trademark that it can renew indefinitely at minimal cost and intends to use indefinitely. How is it accounted for after acquisition?