What is the maximum period over which an identifiable intangible asset must be amortized?

The correct answer states that an identifiable intangible asset must be amortized over the asset's legal life or its estimated useful life, whichever is less. This reflects the guidance provided by accounting standards, specifically under GAAP (Generally Accepted Accounting Principles) for the treatment of intangible assets.

Identifiable intangible assets, such as patents, copyrights, and trademarks, often have a finite life. The legal life refers to the duration that the asset is protected under legal rights, while the estimated useful life considers how long the asset is expected to provide economic benefits to the entity. By amortizing over the shorter of the two periods, the accounting reflects a more accurate representation of the asset's value on the financial statements.

Amortization is designed to match the expense of using the asset with the revenue it generates. Therefore, using the shorter of the legal life or estimated useful life ensures that entities do not inflate their asset values beyond reasonable expectations.

In contrast, some alternatives suggest a fixed period of 10 years or indefinite life treatments for amortization, which do not accurately represent the guidelines for amortizing identifiable intangible assets. These options do not take into account the specific characteristics of the asset in question, and potentially misstate how long the asset should contribute to the company's financial performance