Select all that applyThe useful life of an intangible asset may be limited by what type of provisions? (Select all that apply.)Multiple select question.legalregulatorycontractualU.S. GAAPNeed help? Review these concept resources.Read About the Concept
Question
Select all that applyThe useful life of an intangible asset may be limited by what type of provisions? (Select all that apply.)Multiple select question.legalregulatorycontractualU.S. GAAPNeed help? Review these concept resources.Read About the Concept
Solution
The useful life of an intangible asset may be limited by:
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Legal provisions: These are laws or regulations that may limit the period during which an entity can use an intangible asset. For example, a patent is a legal right that typically lasts for 20 years.
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Regulatory provisions: These are rules set by regulatory bodies that may limit the period during which an entity can use an intangible asset. For example, a license or permit granted by a government agency may only be valid for a certain period.
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Contractual provisions: These are terms and conditions agreed upon in a contract that may limit the period during which an entity can use an intangible asset. For example, a franchise agreement may specify a certain period during which the franchisee can use the franchisor's brand name and business model.
U.S. GAAP (Generally Accepted Accounting Principles) is not a provision that limits the useful life of an intangible asset. It is a set of accounting principles, standards, and procedures that companies must follow when they compile their financial statements.
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