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Intangible

The document outlines the characteristics and types of intangible assets, which are identifiable, lack physical existence, and are not monetary assets, recorded at cost and amortized using the straight-line method. It details various categories of intangible assets, including trademarks, copyrights, goodwill, and research and development costs, emphasizing that R&D costs are only considered intangible assets when projects are economically viable. Goodwill is specifically noted as the excess of the purchase cost over the fair value of identifiable net assets in business acquisitions.

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2 views11 pages

Intangible

The document outlines the characteristics and types of intangible assets, which are identifiable, lack physical existence, and are not monetary assets, recorded at cost and amortized using the straight-line method. It details various categories of intangible assets, including trademarks, copyrights, goodwill, and research and development costs, emphasizing that R&D costs are only considered intangible assets when projects are economically viable. Goodwill is specifically noted as the excess of the purchase cost over the fair value of identifiable net assets in business acquisitions.

Uploaded by

anhtuan122718
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Intangible assets

INTANGIBLE ASSET ISSUES

Characteristics
1. Identifiable.
2. Lack physical existence.
3. Not monetary assets.

◆ Recorded at cost.

◆ Includes all acquisition costs plus expenditures to make the


intangible asset ready for its intended use (Purchase price, Legal fees,
Other incidental expenses)

◆ Amortization – straight line method

2
TYPES OF INTANGIBLE ASSETS

► Trademarks or trade names, Internet domain names


(Marketing-Related Intangible Assets)

• Plays, literary works, musical works, pictures, photographs,


and video and audiovisual material (Artistic-Related Intangible
Assets)
• Copyright granted for the life of the creator plus 70 years.
3
TYPES OF INTANGIBLE ASSETS

• Franchise and licensing agreements, construction permits

• Customer lists (Customer-Related Intangible Assets)

• Patented technology and trade secrets granted by a


government body (Technology-Related Intangible Assets)
• Patent gives holder exclusive use for a period of 20 years.

4
TYPES OF INTANGIBLE ASSETS

Goodwill
Conceptually, represents the future economic benefits arising from
the other assets acquired in a business combination that are not
individually identified and separately recognized.

Only recorded when an entire business is purchased.

Goodwill is measured as the excess of ...

cost of the purchase over the fair value of the identifiable net
assets (assets less liabilities) purchased.

5
RECORDING GOODWILL

Illustration: The president of Feng Company is interested in buying


Tractorling Company. The illustration presents the statement of
financial position of Tractorling Company.

6
RECORDING GOODWILL

Illustration: Determination of Goodwill.

7
RESEARCH AND DEVELOPMENT COSTS

Research and development (R&D) costs are not in themselves intangible


assets. They begin when the project is far enough along in the process such
that the economic benefits of the R&D project will flow to the company
(the project is economically viable).

Frequently results in the development of patents or copyrights such


as new
◆ product, ◆ formula,

◆ process, ◆ composition, or

◆ idea, ◆ literary work.

8
RESEARCH AND DEVELOPMENT COSTS

Companies spend considerable sums on research and development.

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RESEARCH AND DEVELOPMENT COSTS

◼ Finished projects – intangible assets


◼ Not finished projects – operating cost
◼ Failed projects – other perating cost

10
RESEARCH AND DEVELOPMENT COSTS

Identifying R & D Activities

Research Activities Examples


Original and planned investigation Laboratory research aimed at discovery of
undertaken with the prospect of gaining new knowledge; searching for applications of
new scientific or technical knowledge new research findings.
and understanding.

Development Activities Examples


Application of research findings or other Conceptual formulation and design of
knowledge to a plan or design for the possible product or process alternatives;
production of new or substantially construction of prototypes and
improved materials, devices, products, operation of pilot plants.
processes, systems, or services before
the start of commercial production or
use.

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