ch12 - 12-11.Accounting for and valuation of intangible...

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Unformatted text preview: 12-11.Accounting for and valuation of intangible assets.2.Amortizing intangible assets.3.Types of intangible assets.4.Accounting issues related to goodwill.5.Accounting issues related to intangible asset impairments.6.Accounting for research and development and similar costs.7.Presentation of intangible assets and related items.Learning ObjectivesLearning ObjectivesLearning ObjectivesLearning Objectives12-2Intangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesLO 1 Describe the characteristics of intangible assets.Characteristics(1)Lack physical existence.(2)Not financial instruments.Normally classified as long-term asset.Common types of intangibles:PatentsCopyrightsFranchises or licensesTrademarks or trade namesGoodwill12-3Types of IntangiblesTypes of IntangiblesTypes of IntangiblesTypes of IntangiblesLO 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.12-4Intangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesLO 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.Typical costs include:Purchase price.Legal fees.Other incidental expenses.Valuation12-5Intangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesLO 2 Identify the costs to include in the initial valuation of intangible assets.ValuationInternally CreatedIntangibles:Generally expensed.Only capitalize direct costs incurred in developing the intangible, such as legal costs.12-6Intangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesLO 3 Explain the procedure for amortizing intangible assets.Amortization of IntangiblesLimited-Life Intangibles:Amortize by systematic charge to expense over useful life.Credit asset account or accumulated amortization.Useful life should reflect the periods over which the asset will contribute to cash flows.Amortization should be cost less residual value.12-7Intangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesLO 3 Explain the procedure for amortizing intangible assets.Amortization of IntangiblesIndefinite-LifeIntangibles:No foreseeable limit on time the asset is expected to provide cash flows. No amortization.Must test indefinite-life intangibles for impairment at least annually.12-8Intangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesIntangible Asset IssuesLO 3 Explain the procedure for amortizing intangible assets....
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This note was uploaded on 03/18/2012 for the course ACC 321 taught by Professor Staff during the Spring '08 term at Miami University.

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ch12 - 12-11.Accounting for and valuation of intangible...

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