Chapter 7
Controlling and Reporting of Intangible Assets
By Boundless
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Intangible assets are identifiable non-monetary assets that cannot be seen, touched, or physically measured.
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The valuation of intangible assets are primarily derived from transactions involving intangible assets.
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The costs of intangible assets with identifiable useful lives are amortized over their economic/legal life.
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A trademark is an intangible asset legally preventing others from using a business's logo, name, or other branding.
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A copyright is an amortizable, intangible asset that is used to secure the legal right to publish a work of authorship.
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A patent is an amortizable, intangible asset that grants a business the sole right to manufacture and sell an invention.
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Goodwill is an intangible asset that equals an acquired company's purchase price minus the value of its net assets when it was acquired.
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Franchises and licenses are intangible assets that legally entitle a business to sell a product or service developed by another entity.
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Limited-life intangibles are amortized throughout the useful life of the intangible asset using either the units of activity or the straight-line method.
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Because Indefinite-life tangibles continue to generate cash they can't be amortized; they must be evaluated for impairment yearly.
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Goodwill is an intangible asset that is tested yearly for impairment; it is not amortized.
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The primary function of R&D is to develop new products or discover and create new knowledge about scientific and technological topics.
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Research and development costs no longer appear as intangible assets on the balance sheet, but as expenses on the income statement.
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Intangible assets are either recorded at cost or expensed as they are created.
Expense R&D, unless items have alternative future uses, then allocate as consumed, or capitalize and depreciate as used.
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Intangibles with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter.