ACCOUNTING FOR INTANGIBLES—U.S. GAAP
I. GENERAL PRINCIPLES
The broad principles governing the accounting for Intangible assets are laid out in APB 17. According to APB 17, Paragraph 9, a company should record costs of intangible assets acquired from others, including goodwill, as an asset. All costs incurred to develop intangible assets that are not specifically identifiable should be recorded as expenses. Where an intangible asset has been recorded, its cost should be amortized by systematic charges to income over the estimated period of benefit of the asset. The amortization period should not exceed forty years in any case.
The provisions of APB 17 apply to intangible assets recorded on the acquisition of some or all of the stock held by …show more content…
Cost is measured differently for specifically identifiable intangible assets and those lacking specific identification. The cost of identifiable intangible assets is an assigned part of the total cost of the group of assets or enterprise acquired, normally based on the fair values of the individual assets. The cost of unidentifiable intangible assets is measured by the difference between the cost of the group of assets or enterprise acquired and the sum of the assigned costs of individual tangible and identifiable intangible assets acquired less liability assumed. Cost should be assigned to all specifically identifiable intangible assets; cost of identifiable assets should not be included in …show more content…
It is the most common unidentifiable intangible asset. While identifiable intangible assets may be acquired singly, as a part of a group of assets or as part of an entire enterprise, unidentifiable assets cannot be acquired singly.
Amortization of Goodwill. —APB 17 requires that goodwill be amortized using the straight-line method unless a company can demonstrate that another systematic method is more appropriate. In order to use an accelerated method to amortize goodwill a company has to demonstrate that:
a) The amount assigned to goodwill represents an amount paid for factors such as those listed in paragraph 27,2 but there is not a satisfactory basis for determining appraised values for the individual factors, and
b) The benefits expected to be received from the factors decline over the expected life of those factors.
APB 17, paragraph 31, also specifies that a company has to continuously evaluate the period of amortization of intangibles to determine whether later events and circumstances warrant revised estimates of useful lives. However, the useful life of the unidentifiable intangible asset cannot be revised upward in any
I. GENERAL PRINCIPLES
The broad principles governing the accounting for Intangible assets are laid out in APB 17. According to APB 17, Paragraph 9, a company should record costs of intangible assets acquired from others, including goodwill, as an asset. All costs incurred to develop intangible assets that are not specifically identifiable should be recorded as expenses. Where an intangible asset has been recorded, its cost should be amortized by systematic charges to income over the estimated period of benefit of the asset. The amortization period should not exceed forty years in any case.
The provisions of APB 17 apply to intangible assets recorded on the acquisition of some or all of the stock held by …show more content…
Cost is measured differently for specifically identifiable intangible assets and those lacking specific identification. The cost of identifiable intangible assets is an assigned part of the total cost of the group of assets or enterprise acquired, normally based on the fair values of the individual assets. The cost of unidentifiable intangible assets is measured by the difference between the cost of the group of assets or enterprise acquired and the sum of the assigned costs of individual tangible and identifiable intangible assets acquired less liability assumed. Cost should be assigned to all specifically identifiable intangible assets; cost of identifiable assets should not be included in …show more content…
It is the most common unidentifiable intangible asset. While identifiable intangible assets may be acquired singly, as a part of a group of assets or as part of an entire enterprise, unidentifiable assets cannot be acquired singly.
Amortization of Goodwill. —APB 17 requires that goodwill be amortized using the straight-line method unless a company can demonstrate that another systematic method is more appropriate. In order to use an accelerated method to amortize goodwill a company has to demonstrate that:
a) The amount assigned to goodwill represents an amount paid for factors such as those listed in paragraph 27,2 but there is not a satisfactory basis for determining appraised values for the individual factors, and
b) The benefits expected to be received from the factors decline over the expected life of those factors.
APB 17, paragraph 31, also specifies that a company has to continuously evaluate the period of amortization of intangibles to determine whether later events and circumstances warrant revised estimates of useful lives. However, the useful life of the unidentifiable intangible asset cannot be revised upward in any