Current accounting standards indicate that the costs of intangible assets with an indefinite life, such as goodwill, should
A)not be amortized, but should be reviewed annually for impairment.
B)be reported on the statement of retained earnings in the year in which acquired.
C)be amortized over a reasonable period of time not to exceed 40 years.
D)be debited to an expense account entirely in the year in which acquired.

Question

Quizplus · Accepted Answer

According to current accounting standards, the costs of intangible assets with an indefinite life, such as goodwill, should not be amortized. Instead, they should be reviewed annually for impairment to assess if their value has decreased. This approach is consistent with the principle of matching expenses with revenues and recognizing losses as soon as they are identified. Therefore, the correct answer is A.

Current Accounting Standards Indicate That the Costs of Intangible Assets