中南财经政法大学：《中级会计学 Intermediate Accounting》课程电子教案（PPT课件讲稿，英文版）Chapter 9 Intangibles

9 Intangibles ntermediate Accounting Accounting School. Zhongnan

9 Intangibles Accounting School ·Zhongnan University of Economics & Law ntermediate Accounting I 中级会计学

1. Accounting for Intangibles Characteristics that Distinguish Intangible There is generally a higher degree of uncertainty regarding the future benefits that may be derived Their value is subject to wider fluctuations because it may depend to a considerable extent on competitive conditions They may have value only to a particular company. Goodwill and intangible assets with indefinite lives are not expensed

• There is generally a higher degree of uncertainty regarding the future benefits that may be derived. • Their value is subject to wider fluctuations because it may depend to a considerable extent on competitive conditions. • They may have value only to a particular company. • Goodwill and intangible assets with indefinite lives are not expensed. Intermediate Accounting 9 Intangibles 1. Accounting for Intangibles Characteristics that Distinguish Intangibles

Classification of Intangibles Capitalize the cost incurred to acquire an Identifiable→→→ intangible assets with a finite life and amortize over its useful life urchase Capitalize the cost Unidentifiable incurred to acquire (i. e, goodwill) goodwill and review it for impairment at least annually

Classification of Intangibles Purchased Identifiable Capitalize the cost incurred to acquire an intangible assets with a finite life and amortize over its useful life. Unidentifiable (i.e., goodwill) Capitalize the cost incurred to acquire goodwill and review it for impairment at least annually. Intermediate Accounting 9 Intangibles

Classification of Intangibles Expense research and development costs as incurred Capitalize certain costs Identifiable incurred for an intangible asset with a finite life and Internally amortize over its useful life Developed Capitalize certain costs Incurred for an intangible asset with an infinite life and amortize over its useful life Unidentifiable- Expense costs as incurred

Classification of Intangibles Internally Developed Identifiable Unidentifiable Expense research and development costs as incurred Capitalize certain costs incurred for an intangible asset with a finite life and amortize over its useful life Capitalize certain costs incurred for an intangible asset with an infinite life and amortize over its useful life Expense costs as incurred Intermediate Accounting 9 Intangibles

Accounting for the cost of intangibles is discussed in fasB statement No. 142 as follows 1. Purchased Identifiable Intangibles. A company may purchase an intangible asset from another company. The purchase is handled in the same manner as the acquisition of a single asset, in a group of assets, or in an exchange of similar or dissimilar assets continued

1. Purchased Identifiable Intangibles. A company may purchase an intangible asset from another company. The purchase is handled in the same manner as the acquisition of a single asset, in a group of assets, or in an exchange of similar or dissimilar assets. Accounting for the cost of intangibles is discussed in FASB Statement No. 142 as follows: Intermediate Accounting 9 Intangibles continued

Accounting for the cost of intangibles is discussed in fasB statement No. 142 as follows 2. Purchased Unidentifiable intangibles. A company capitalizes the cost of a purchased unidentifiable intangible asset. The principal example of an unidentifiable intangible is goodwill. continued

2. Purchased Unidentifiable Intangibles. A company capitalizes the cost of a purchased unidentifiable intangible asset. The principal example of an unidentifiable intangible is goodwill. Accounting for the cost of intangibles is discussed in FASB Statement No. 142 as follows: Intermediate Accounting 9 Intangibles continued

Accounting for the cost of intangibles is discussed in fasb statement No. 142 as follows 3. Internally Developed Identifiable intangibles. When a company internally develops an intangible assets, it can capitalize only certain costs. The expensing of research and development costs represents an exception to the general rule of capitalizing of internally developed identifiable intangibles continued

3. Internally Developed Identifiable Intangibles. When a company internally develops an intangible assets, it can capitalize only certain costs. The expensing of research and development costs represents an exception to the general rule of capitalizing of internally developed identifiable intangibles. Accounting for the cost of intangibles is discussed in FASB Statement No. 142 as follows: Intermediate Accounting 9 Intangibles continued

Accounting for the cost of intangibles is discussed in fasb statement No. 142 as follows 4. Internally Developed unidentifiable Intangibles. a company expenses the costs of internally developed unidentifiable intangibles as incurred even thought they may be expected to have benefits extending beyond the current erlo d. 学已态国

4. Internally Developed Unidentifiable Intangibles. A company expenses the costs of internally developed unidentifiable intangibles as incurred even thought they may be expected to have benefits extending beyond the current period. Accounting for the cost of intangibles is discussed in FASB Statement No. 142 as follows: Intermediate Accounting 9 Intangibles

Amortization of Intangibles Intangible Assets With a finite life Are amortized The calculation of the amortization of intangible assets follows the same principles as the depreciation of tangible assets

Intangible Assets With a Finite Life Are Amortized. The calculation of the amortization of intangible assets follows the same principles as the depreciation of tangible assets. Amortization of Intangibles Intermediate Accounting 9 Intangibles

Amortization of Intangibles A company purchases a patent for $85,000 Patent 85.000 Cash 85.000 At year-end the patent is amortized over 10 years(no expected residual value) Amortization Expense(or Factory Overhead 8500 Accumulated amort- zation Patent 8500

Amortization of Intangibles A company purchases a patent for $85,000. Patent 85,000 Cash 85,000 At year-end the patent is amortized over 10 years (no expected residual value). Amortization Expense (or Factory Overhead) 8,500 Accumulated Amorti￾zation: Patent 8,500 Intermediate Accounting 9 Intangibles