ACG3141 ch12 ppt - 12 Intangible Assets Intermediate...

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12-1 Intermediate Accounting 12 Intangible Assets Kieso, Weygandt, and Warfield
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12-2 Sustainability Sustainability Sustainability Sustainability ESG Environmental, Social, Governance
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12-3 Marketing- related Customer- related Artistic- related Contract- related Technology- related Goodwill Intangible Asset Issues Types of Intangibles Impairment of Intangibles Research and Development Costs Presentation of Intangibles and Related Items Characteristics Valuation Amortization Limited-life intangibles Indefinite-life intangibles other than goodwill Goodwill Summary Identifying R&D Accounting for R&D Similar costs Conceptual questions Intangible assets R&D costs Intangible Assets Intangible Assets Intangible Assets Intangible Assets
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12-4 Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Characteristics (1) Lack physical existence. (2) Not financial instruments. Normally classified as long-term asset. Common types of intangibles: Patents Copyrights Franchises or licenses Trademarks or trade names Goodwill
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12-5 Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Purchased Intangibles: Recorded at cost. Includes all costs necessary to make the intangible asset ready for its intended use. Typical costs include: Purchase price. Legal fees. Other incidental expenses. Valuation
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12-6 Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Valuation Internally Created Intangibles: Generally expensed. Only capitalize direct costs incurred in developing the intangible, such as legal costs. Google expensed the R&D costs incurred to develop its valuable search engine.
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12-7 Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Amortization of Intangibles Limited-Life Intangibles: Amortize by systematic charge to expense over useful life. Credit asset account directly (or accumulated amortization). Useful life reflects periods over which asset will contribute to cash flows. Use cost less residual value. Evaluate for impairment.
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12-8 Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Amortization of Intangibles Indefinite-Life Intangibles: No foreseeable limit on time the asset is expected to provide cash flows. Test for impairment at least annually. No amortization.
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12-9 Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Intangible Asset Issues Amortization of Intangibles
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12-10 Types of Intangibles Types of Intangibles Types of Intangibles Types of Intangibles Six Major Categories: (1) Marketing-related (trademarks) (2) Customer-related (3) Artistic-related (copyrights) (4) Contract-related (franchises) (5) Technology-related (patents) (6) Goodwill
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12-11 Types of Intangibles Types of Intangibles Types of Intangibles Types of Intangibles Marketing-Related Intangible Assets Examples :
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