Which of the following is true about indefinite life intangibles?

Indefinite life intangibles refer to intangible assets that are not subject to amortization because they are expected to provide economic benefits lasting indefinitely. This means that the entity believes there is no foreseeable limit to the period over which these assets will contribute to cash flows.

The rationale behind the treatment of indefinite life intangibles is that they do not have a predictable life span, which differentiates them from intangible assets with a defined useful life that are systematically amortized over that period. Examples of indefinite life intangibles include certain trademarks and goodwill.

In accounting terms, such assets are instead tested for impairment at least annually. If an indefinite life intangible is determined to be impaired, the asset must be written down to reflect its fair value. This emphasizes that while these intangibles are not amortized, they still require assessment for impairment to ensure that their carrying amounts are not overstated.

This understanding is crucial for financial reporting and balance sheet integrity, as well as influencing investment decisions based on the asset's ability to deliver long-term value.