E describe the different amortization methods for intangible assets with finite lives, the effect of the choice of amortization method on the financial statements, and the effects of assumptions concerning useful life and residual value on amortization expense; Flashcards
E. Describe the different amortization methods for intangible assets with finite lives, the effect of the choice of amortization method on the financial statements, and the effects of assumption concerning useful life and residual value on amortization expense. Long-lived assets inc. tangible assets, intangible, financial and acct. est's and choices for long-lived assets affect the firms profits, ratios, and cash flow classifications. Understanding effects and issues of capitalizing, o
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Q
Amortization is identical to depr (only finite intangibles are amortized)
A
That is, finite intangible amortization methods include SL, accelerated, units of production.
Legal, regulatory, contractual, competitive, and economic factors complicate and limit the use of intangible assets
As with depr, the total amount under each method comes out to be the same. However, timing in expense recognition and effects on the NI statement vary.
Indefinition lives, tested for impairment, and goodwill is created as a result of a business combo and it unidentifiable.
A trademark is indefinite but identifiable - it may have a n expiration but that can be renewed - then we consider it as indefinite life and no amortization is required.
