If an intangible asset has a legal life of eight years but contractually the usefulness is limited to six years, a company will amortize the cost over:
A) Eight years.
B) Six years.
C) Seven years.
D) Either six or eight years is allowed.

Question

Quizplus · Accepted Answer

The useful life of an intangible asset for accounting purposes is determined by the shorter of the legal life or the contractual usefulness. In this case, the contractual usefulness is limited to six years, so the asset should be amortized over six years.

If an Intangible Asset Has a Legal Life of Eight