If an Intangible Asset Has a Legal Life of Eight

question 57

Multiple Choice

If an intangible asset has a legal life of eight years but contractually the usefulness is limited to six years, a company will amortize the cost over:

• A) Eight years.
• B) Six years.
• C) Seven years.
• D) Either six or eight years is allowed.

---

Definitions:

Fiat Money

Currency that a government has declared to be legal tender, despite it having no intrinsic value or being backed by a physical commodity.

Liability

A legal financial obligation or debt that an entity owes to another entity, required to be settled through the transfer of assets, provision of services, or other financial settlement.

Federal Reserve Note

The official paper currency of the United States, issued by the Federal Reserve, and the most common form of U.S. banknotes in circulation.

Token Money

Money whose face value exceeds its cost of production, typically involving coins and paper money not backed by a commodity.