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Unformatted text preview: ssumed to have a finite useful life. Thus, it is usual practice to
amortize intangible assets over their estimated useful life to the net amount expected to be
recovered on disposal, if any.
Purchased goodwill should be:
(1) Allocated on the basis of the fair values of the underlying assets acquired; then
(2) Fully written off against reserves at the time of acquisition; or
(3) Recognized as an intangible fixed asset at acquisition and amortized by systematic
charges to income over the period during which benefits are expected to arise, which as a
general rule do not exceed 5 years.
If capitalized, development costs must be amortized over a maximum of 5 years.
The Act states that goodwill and other intangible assets shall be depreciated according to plan
over at least in 5 years, or a longer period (maximum 20 years) if in accordance with good
accounting practice. Organizational costs shall be depreciated over at least 5 years.
Intangibles that represent permanent rights are exceptions. The common policy followed by
companies has been to depreciate intangibles over 10 years, due to the fact...
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- Fall '13
- The Land