2.2.3. Amortization
Intangible assets are assets that have no physical existence and a useful life of more than one year. They include patents, copyrights, franchises, and, when only for internal use, computer software. The useful life of some intangible assets is fixed by law. Patents, for example, are good for 20 years. Others, such as franchises, are fixed by contract. The useful life of computer software purchased for internal use must be estimated, based on a company’s experience. To be amortized, however, the life of an intangible asset must be finite, and it must be calculable “with reasonable accuracy.”
Like natural resources, intangible assets are considered a wasting asset. They are amortized in much