Question

What is the difference between limited-life versus indefinite-life intangible assets? please put some examples

Answer 1

Intangible Assets -

Intangible Assets are type of assets which don't have physical existnace but form part of the fixed assets. Intangible assets are shown in the balance sheet assets side and as the usage basis impaired or amortised over a period of usage of intangible assets.

Example of Intangible Assets - Patents, Goodwill, Trademarks, Copyright and so on.

Limited Life Intangible Assets -

In this type of intangible assets as per the available life of the intangible assets amortisation will be done on the intangible assets.

For Example - Patents has a life of 10 years $100,000

For the period of 10 years patents amortised with value $10,000 for every year for the period of 10 years.

Indefinite Life Intangible Assets -

This intangibles continous and have no definate life they continue to perform their part in the company as they can not be amortised.

Example - Goodwill, Trademarks

This intangibles are impaired every year and

Impairment = Carrying value - Recoverable amount.