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:

Capital Budgeting

The process by which a business evaluates and selects long-term investments that are worth more than their cost to achieve strategic goals.

Cash Flows

The total amount of money being transferred into and out of a business, which affects the company's liquidity.

Initial Cost

The upfront expenditure related to acquiring or starting a new project or investment, not including ongoing or future costs.

Risk Level

A measure of the uncertainty associated with achieving return objectives within investing, often determined by the volatility in asset prices and market fluctuations.