The cost of long-lived assets with an indefinite life
A)is not recognized as an expense each period.
B)remains on the balance sheet at acquisition cost (unless an asset impairment occurs).
C)is recognized as an expense each period.
D)presents a balance sheet carrying value that decreases over time as the firm recognizes the cost of the asset as an expense.
E)includes both choices a and b.

Question

Quizplus · Accepted Answer

Long-lived assets with an indefinite life, such as goodwill, are not amortized, meaning their cost is not recognized as an expense each period (A). Instead, these assets remain on the balance sheet at their acquisition cost, subject to impairment tests to determine if their value has decreased (B). Choices A and B are both correct, making E the correct answer.

The Cost of Long-Lived Assets with an Indefinite Life