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How is the useful life of an intangible asset determined?

How is the useful life of an intangible asset determined?

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Intangible assets have a useful life that is either identifiable or indefinite. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, which ever is shorter. Intangible assets with indefinite useful lives are assessed each year for impairment.

The useful life of intangible assets is the duration it contributes to your business's value. For example, a patent that lasts 20 years would have a useful life of 20 years.

Useful Lives

Intangible assets have a useful life that is either identifiable or indefinite. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter. The finite useful life of an intangible asset is considered to be the length of time it is expected to contribute to the cash flows of the reporting entity. Pertinent factors that should be considered in estimating the useful lives of intangible assets include legal, regulatory, or contractual provisions that may limit the useful life.

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