Which of the Following Statements Best Describes the Accounting Treatment

question 60

Multiple Choice

Which of the following statements best describes the accounting treatment of Intangible Assets with indefinite lives?

• A)all intangible assets are written down when their carrying values exceed their fair market values.
• B)with the exception of Goodwill,all intangible assets are written down when their carrying values exceed their fair market values.
• C)all intangible assets are written down when their carrying values exceed their undiscounted future cash flows.
• D)the recoverable amount is determined and compared to the carrying amount.If the recoverable amount is greater than the carrying amount than no impairment exists.Otherwise,there is an impairment and the asset is written down to its recoverable amount.

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Definitions:

Annual Cash Inflow

The total amount of money being received into a business from all sources over the course of a year.

Depreciation

The process of allocating to expense the cost of a plant asset over its useful (service) life in a rational and systematic manner.

Net Income

The net income of a company once all costs and taxes are deducted from the total revenue.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's cost. It measures the profitability or efficiency of an investment.