intangible

Examples of intangible in the following topics:

• Valuation of Intangible Assets

  • The valuation of intangible assets are primarily derived from transactions involving intangible assets.
  • Since few sales of intangible assets are observable, benchmarking the value of intangible assets can be difficult.
  • If a company incurs legal costs to successfully defend an intangible asset, those costs are capitalized and increase the value of the intangible.
  • On the other hand, if a company is unsuccessful in defending an intangible asset, the intangible is worthless and the company is required to write it off.
  • Goodwill is an excellent example of how intangible assets are valued.

• Reporting Intangibles

  • If intangibles are acquired for stock or in exchange for other assets, the cost of the intangible is the fair value of the consideration given or the fair value of the intangible received, whichever is more clearly evident.
  • The cost of created intangibles is generally expensed as incurred.
  • Others note that with a purchased intangible, a reliable number for the cost of the intangible can be determined.
  • With internally developed intangibles, it is difficult to associate costs with specific intangible assets.
  • The accounting for intangible assets depends on whether the intangible has a limited or an indefinite life.

• Limited-Life Impairment

  • Limited-life intangibles are amortized throughout the useful life of the intangible asset using either the units of activity or the straight-line method.
  • They are classified into categories: either purchased vs. internally created intangible assets; and limited-life or indefinite-life intangible assets.
  • Limited-life intangibles are intangible assets with a limited useful life, such as copyrights, patents and trademarks
  • Examples of intangible assets with a limited-life include copyrights and patents.
  • Limited-life intangibles are systemically amortized throughout the useful life of the intangible asset using either units of activity method or straight-line method.

• Indefinite-Life Impairment

  • Under US GAAP, intangible assets are classified into: Purchased vs. internally created intangibles, and Limited-life vs. indefinite-life intangibles.
  • Since intangible assets are typically expensed according to their respective life expectancy, it is important to understand the difference between limited-life intangible assets and indefinite-life intangible assets.
  • Some examples of indefinite-life intangibles are goodwill, trademarks, and perpetual franchises.
  • Intangibles can also be classified as: legal intangibles or competitive intangibles.
  • Legal intangibles are also known as Intellectual Property.

• Characteristics of Intangible Assets

  • Intangible assets are identified separately on a company's financial statements, and come in two primary forms: legal intangibles and competitive intangibles.
  • Human capital is the primary source of competitive intangibles.
  • Goodwill is a type of intangible asset that is acquired and recorded due to a business acquisition or combination rather unlike other intangible assets, which may be internally developed by the company.
  • Under US GAAP, intangible assets are classified into: Purchased vs.
  • Firms initially record intangible assets at cost, however only costs associated with the outright purchase in the acquisition of an intangible asset.

• Amortization of Intangible Assets

  • The costs of intangible assets with identifiable useful lives are amortized over their economic/legal life.
  • Amortization is the systematic write-off of the cost of an intangible asset to an expense, which effectively allocates a portion of the intangible asset's cost to each accounting period in the economic or legal life of the asset (an amortization expense).
  • Only recognized intangible assets with finite useful lives are amortized.
  • An intangible asset is amortized if the asset has an identifiable useful life.
  • Company X would recognize an intangible asset valued at $17,000 and amortize that cost over 17 years.

• Analyzing Intangible Assets

  • Examples of intangible assets with identifiable useful lives include copyrights and patents.
  • Trademarks and goodwill are examples of intangible assets with indefinite useful lives.
  • Some costs with respect to intangible assets must be capitalized rather than treated as deductible expenses.
  • Treasury regulations generally require capitalization of costs associated with acquiring, creating, or enhancing intangible assets.
  • Research and development (R&D) costs are not in and of themselves intangible assets.

• Trademarks

  • A trademark is an intangible asset legally preventing others from using a business's logo, name, or other branding.
  • A trademark is an intangible asset, as it's a nonphysical item granting a business the legal right to exclusively use a logo or other item.
  • A business can only value any intangible asset, including a trademark, based on what it cost to acquire.
  • Some intangible assets are amortized over time.
  • If a business determines that one of its trademarks is worth less than it was a year ago, the value of the intangible asset must be impaired.

• Types of Long-Lived Assets

  • ., buildings and equipment) and intangible assets (e.g. copy rights).
  • Examples of intangible assets are copyrights, trademarks, patents and computer programs, financial assets-- including such items as accounts receivable, bonds and stocks-- and goodwill.

• Goodwill Impairment

  • Goodwill is an intangible asset that is tested yearly for impairment; it is not amortized.
  • In accounting, goodwill is the value of an asset that is considered intangible but has a quantifiable "prudent value" in a business.
  • While goodwill is technically an intangible asset, it is usually listed as a separate item on a company's balance sheet .