Finite-Life vs. Indefinite-Life Intangible Assets
Useful Life Classification
The accounting treatment of an intangible asset depends on whether its useful life is finite or indefinite. Finite-life assets are amortized over their useful lives, while indefinite-life assets are not amortized but are tested periodically for impairment.
Tip
The expected period of economic benefit—not merely the legal life—determines the useful life for amortization purposes.
Summary
Finite-life assets are amortized, while indefinite-life assets are tested for impairment instead.