question archive ANSWER IN YOU OWN WORDS! QUESTION 13 only explains what needs to be done when answering question e
ANSWER IN YOU OWN WORDS! QUESTION 13 only explains what needs to be done when answering question e
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ANSWER IN YOU OWN WORDS!
QUESTION 13 only explains what needs to be done when answering question e. Question e is the scenario that need to be answered.
Don’t forget to provide references.
Thank you.
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13. Determining the useful life of an intangible asset should generally be based on the lesser of management’s estimate of the period of time over which it is expected to produce benefits (such as cash flows), legal, regulatory, or market-related factors (obsolescence, competition, etc.) that may limit its useful life. What useful life would you estimate for the following intangible assets?
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e. An acquired trademark that is used to identify and distinguish a leading consumer product that has been a market-share leader for the past eight years. The trademark has a remaining legal life of 5 years but is renewable every 10 years at little cost. The acquiring entity intends to continuously renew the trademark, and evidence supports its ability to do so. An analysis of product life cycle studies; market, competitive, and environmental trends; and brand extension opportunities provides evidence that the trademarked product will generate cash flows for the acquiring entity for an indefinite period of time.
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The intangible asset has an indefinite useful life as it is expected to generate income indefinitely. Additionally, since the asset can be renewed with a little cost, the company would increase the life of the asset to earn the benefits over a longer period of time which is not finite.
