If an Intangible Asset with an Indefinite Life Becomes Impaired

question 103

Multiple Choice

If an intangible asset with an indefinite life becomes impaired, the asset must be

• A) written down to cost.
• B) written down to fair value.
• C) sold at its net realizable value.
• D) No adjustment is required and a loss will be recorded when the intangible asset is sold.

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Definitions:

Bonds

Financial instruments issued by governments or corporations to raise funds, representing a loan made by the investor to the issuer.

Money Supply

The combined economic financial resources at a given time in an economy.

Interest Rate

The part of a loan that is added as interest for the borrower, normally expressed as an annual percentage of the existing loan balance.

Reserve Ratio

The reserve ratio is the fraction of total deposits that a bank is required to hold in reserve and not loan out, acting as a regulatory tool to ensure the stability of the banking system.