IAS 38 States That an Intangible Asset Is Deemed to Have

question 38

Multiple Choice

IAS 38 states that an intangible asset is deemed to have an indefinite life when there is no foreseeable end to the expected cash flows the asset is likely to generate. What is the impact of an indefinite life on amortization of the intangible asset's cost under IAS 38?

• A) Management may choose any number of years over which to amortize the cost.
• B) No amortization is taken as long as the life is considered indefinite.
• C) The cost of the asset should be amortized over 20 years.
• D) The cost of the asset should be expensed in the period the intangible asset is acquired.

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Definitions:

Management

The process of dealing with or controlling things or people, often within an organization.

Limited Liability Company

A commercial structure that amalgamates the limited liability protection of a corporation with the direct taxation approach of a partnership or sole proprietorship.

Articles Of Organization

The document that is filed with the appropriate state official, usually the secretary of state, when a limited liability company is formed.

Limited Liability Company

A business model that merges a corporation's limited liability with the partnership or sole proprietorship's pass-through taxation.