9 Intangibles ntermediate Accounting Accounting School. Zhongnan
9 Intangibles Accounting School ·Zhongnan University of Economics & Law ntermediate Accounting I 中级会计学
1. Accounting for Intangibles Characteristics that Distinguish Intangible There is generally a higher degree of uncertainty regarding the future benefits that may be derived Their value is subject to wider fluctuations because it may depend to a considerable extent on competitive conditions They may have value only to a particular company. Goodwill and intangible assets with indefinite lives are not expensed
• There is generally a higher degree of uncertainty regarding the future benefits that may be derived. • Their value is subject to wider fluctuations because it may depend to a considerable extent on competitive conditions. • They may have value only to a particular company. • Goodwill and intangible assets with indefinite lives are not expensed. Intermediate Accounting 9 Intangibles 1. Accounting for Intangibles Characteristics that Distinguish Intangibles
Classification of Intangibles Capitalize the cost incurred to acquire an Identifiable→→→ intangible assets with a finite life and amortize over its useful life urchase Capitalize the cost Unidentifiable incurred to acquire (i. e, goodwill) goodwill and review it for impairment at least annually
Classification of Intangibles Purchased Identifiable Capitalize the cost incurred to acquire an intangible assets with a finite life and amortize over its useful life. Unidentifiable (i.e., goodwill) Capitalize the cost incurred to acquire goodwill and review it for impairment at least annually. Intermediate Accounting 9 Intangibles
Classification of Intangibles Expense research and development costs as incurred Capitalize certain costs Identifiable incurred for an intangible asset with a finite life and Internally amortize over its useful life Developed Capitalize certain costs Incurred for an intangible asset with an infinite life and amortize over its useful life Unidentifiable- Expense costs as incurred
Classification of Intangibles Internally Developed Identifiable Unidentifiable Expense research and development costs as incurred Capitalize certain costs incurred for an intangible asset with a finite life and amortize over its useful life Capitalize certain costs incurred for an intangible asset with an infinite life and amortize over its useful life Expense costs as incurred Intermediate Accounting 9 Intangibles
Accounting for the cost of intangibles is discussed in fasB statement No. 142 as follows 1. Purchased Identifiable Intangibles. A company may purchase an intangible asset from another company. The purchase is handled in the same manner as the acquisition of a single asset, in a group of assets, or in an exchange of similar or dissimilar assets continued
1. Purchased Identifiable Intangibles. A company may purchase an intangible asset from another company. The purchase is handled in the same manner as the acquisition of a single asset, in a group of assets, or in an exchange of similar or dissimilar assets. Accounting for the cost of intangibles is discussed in FASB Statement No. 142 as follows: Intermediate Accounting 9 Intangibles continued