Brief Definition
Non-amortizable intangibles are assets that cannot be gradually written off over time for accounting purposes. Non-amortizable intangibles maintain their value indefinitely and are not subject to systematic depreciation or amortization.
Further Explanation
Non-amortizable intangibles are assets that cannot be gradually written off over time for accounting purposes. Unlike tangible assets, such as machinery or buildings, intangible assets are non-physical and include things like trademarks, goodwill, and brand recognition. Non-amortizable intangibles maintain their value indefinitely and are not subject to systematic depreciation or amortization. Instead, they are tested for impairment periodically, meaning the company checks if their value has decreased and records any losses if necessary.
Example:
Consider a well-known brand like Coca-Cola. The brand name itself is an intangible asset. Coca-Cola does not amortize the value of its brand over time because it is considered to have an indefinite lifespan. Instead, the company regularly assesses if the brand has lost value and adjusts its financial statements accordingly.