Final answer:
Goodwill is the intangible asset not subject to amortization, unlike patents, franchises, and copyrights that are amortized. The correct answer is option 2.
Step-by-step explanation:
Among the list of intangible assets provided, goodwill is the one that is not amortized. Intangible assets like patents, franchises, and copyrights are typically amortized over their useful lives, reflecting the period over which they generate economic benefits to the company.
Goodwill, on the other hand, represents the excess of the purchase price over the fair value of the identifiable net assets in a business acquisition. It arises from factors such as a strong brand, customer relations, or exceptional employee relations. According to accounting standards, rather than being amortized, goodwill must be evaluated annually for impairment and if the fair value of goodwill is found to be less than its carrying amount on the books, an impairment loss must be recognized.
The subject of intellectual property, comprising items such as patents, trademarks, copyrights, and trade secrets, implies ownership over an idea or concept instead of tangible property. The treatment and valuation of these assets are of great significance in accounting and are governed by individual country laws and international treaties facilitated by organizations such as the World Intellectual Property Organization (WIPO).