Johan Co. has an intangible asset, which it estimates will have a useful life of 10 years, while Abco Co. has goodwill, which has an indefinite life. Which company should report amortization in its financial statements?
Choice "D" is correct. Johan Co.'s intangible asset is a finite life intangible asset. Finite life intangibles are amortized over the period to be benefited. Abco Co.'s goodwill is not amortized, but is instead analyzed periodically (at least annually) for impairment.
Choices "a", "b", and "c" are incorrect, per the explanation above.
