From the course: Accounting Foundations: Asset Impairment
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Intuitive impairment test for infinite-lived intangibles
From the course: Accounting Foundations: Asset Impairment
Intuitive impairment test for infinite-lived intangibles
- Some intangible assets have indefinite lives and are not amortized. But these indefinite-lived intangibles still must be tested for impairment. One example of an indefinite-lived intangible asset is a broadcast license. Broadcast licenses often have a renewal period of 10 years. Renewal is virtually automatic if the license holder maintains an acceptable level of service to the public. Accordingly, there's no foreseeable end to the useful life of the broadcast license. It has an indefinite life. In this setting, indefinite life is functionally the same as infinite life. Another example of an infinite-lived intangible asset is a trademark. A trademark right is granted for a limited time but trademarks can be renewed almost routinely. If economic factors suggest that the trademark will continue to have value in the foreseeable future, then it's useful life is indefinite. By the way, remember that we're only talking…
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