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intangible assets provides illustrative examples regarding the accounting for intang 599800

Intangible Assets provides illustrative examples regarding the accounting for intangible assets, including the following:

A direct-mail marketing company acquires a customer list and expects that it will be able to derive benefit from the information on the list for at least one year, but no more than three years. The customer list would be amortized over management’s best estimate of its useful life, say 18 months. Although the direct-mail marketing company may intend to add customer names and other information to the list in the future, the expected benefits of the acquired customer list relate only to the customers on that list at the date it was acquired.

In this example, in what ways would management’s decisions and estimates affect the company’s financial statements?

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