ch12 - CHAPTER INTANGIBLE 12 12 ASSETS...

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Chapter 12-1 C H A P T E R C H A P T E R 12 12 I N T A N G I B L E A S S E T S I N T A N G I B L E A S S E T S Intermediate Accounting I Intermediate Accounting I Prof. Volkan Muslu Prof. Volkan Muslu
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Chapter 12-2 Intangible Asset Issues Intangible Asset Issues LO 1 Describe the characteristics of intangible assets. LO 1 Describe the characteristics of intangible assets. Characteristics (1) They lack physical existence. (2) They are not financial instruments. Normally classified as long-term asset. Common types: Patents Copyrights Franchises or licenses Trademarks or trade names Goodwill
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Chapter 12-3 Intangible Asset Issues Intangible Asset Issues LO 2 Identify the costs to include in the initial valuation of intangible assets. LO 2 Identify the costs to include in the initial valuation of intangible assets. Purchased Intangibles : Recorded at cost. Includes all costs necessary to make the intangible asset ready for its intended use. Valuation Internally Created Intangibles: Generally expensed. Only capitalize direct costs incurred in developing the intangible, such as legal costs.
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Chapter 12-4 Intangible Asset Issues Intangible Asset Issues LO 3 Explain the procedure for amortizing intangible assets. LO 3 Explain the procedure for amortizing intangible assets. Amortization Limited-Life Intangibles: Amortize to expense. Credit asset account or accumulated amortization. Impairment: Recoverability and then fair value test Indefinite-Life Intangibles: No foreseeable limit on time the asset is expected to provide cash flows. No amortization. Impairment: Fair value test only
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Chapter 12-5 Types of Intangibles Types of Intangibles LO 4 Describe the types of intangible assets. LO 4 Describe the types of intangible assets. Six Major Categories: (1) Marketing-related. (2) Customer-related. (3) Artistic-related. (4) Contract-related. (5) Technology-related. (6) Goodwill.
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Chapter 12-6 Types of Intangibles Types of Intangibles 1) Marketing-Related Intangible Assets Examples are: trademarks or trade names, newspaper mastheads, Internet domain names, and noncompetition agreements. Trademark or trade name has legal protection for indefinite number of 10 year renewal periods. Capitalize acquisition costs. No amortization.
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Chapter 12-7 Types of Intangibles Types of Intangibles 2) Customer-Related Intangible Assets Examples are: customer lists, order or production backlogs, and both contractual and noncontractual customer relationships. Capitalize acquisition costs. Amortized to expense over useful life.
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12-8 Types of Intangibles Types of Intangibles Assume that Green Market Inc. acquires the customer list of a large newspaper for $6,000,000 on January 1, 2010. Green Market expects to benefit from the information evenly over a three-year period. Record the purchase of the customer list and the amortization of the customer list at the end of each year. Customer List
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This note was uploaded on 02/14/2011 for the course AIM 6330 taught by Professor Volkanmuslu during the Spring '10 term at University of Texas at Dallas, Richardson.

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ch12 - CHAPTER INTANGIBLE 12 12 ASSETS...

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