When an Intangible Asset Becomes Worthless

question 48

Multiple Choice

When an intangible asset becomes worthless,

• A)it should remain on the books at its existing carrying value.
• B)its remaining carrying value should be written off immediately as a loss.
• C)prior years' accounting records should be adjusted retroactively.
• D)its remaining carrying value should be amortized over 20 years.

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Definitions:

Gross Profit

the difference between revenue and the cost of goods sold before deducting overhead, payroll, taxation, and interest payments.

Cost Of Goods Sold

The immediate expenses directly related to creating a company's sold products, covering both labor and materials costs.

Ending Inventory

The total value of goods available for sale at the end of an accounting period, after all sales and purchases have been accounted for.

Accounting Period

A specific time frame for which financial statements are prepared, to measure the performance and financial position of a business.