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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