![]() ![]() The $91,000 is expensed as selling and promotion expense in 2010. The $190,000 should be expensed as research and development expense in 2010. This trademark is an indefinite life intangible and, therefore, should not be amortized. If the pattern of production or consumption cannot be determined, the straight-line method of amortization should be used. The amount of amortization expensed for a limited-life intangible asset should reflect the pattern in which the asset is consumed or used up, if that pattern can be reliably determined. (f) The expected useful life of another asset or a group of assets to which the useful life of the intangible asset may relate. (e) Any legal, regulatory, or contractual provisions that may limit useful life. (d) The level of maintenance expenditure required to obtain the expected future cash flows from the asset. (c) Any legal, regulatory or contractual provisions that enable renewal or extension of the asset’s legal or contractual life without substantial cost. (b) The effects of obsolescence, demand, competition, and other economic factors. Factors to be considered in determining useful life are: (a) The expected use of the asset by the entity. These expenditures would most likely be reported as selling expenses. Companies cannot capitalize self-developed, self-maintained, or self-created goodwill. The cost of purchased intangibles, however, is capitalized because its cost can be objectively verified and reflects its fair value at the date of acquisition. To permit deferral of these types of costs would lead to a great deal of subjectivity because management could argue that almost any expense could be capitalized on the basis that it will increase future benefits. ![]() When intangibles are created internally, it is often difficult to determine the validity of any future service potential. An intangible asset with an indefinite life is not amortized. Limited-life intangibles should be amortized by systematic charges to expense over their useful life. If intangibles are acquired for shares, the cost of the intangible is the fair value of the consideration given or the fair value of the consideration received, whichever is more clearly evident. The three main characteristics of intangible assets are: (a) they are identifiable. Moderate Moderate Moderate Moderate ModerateĪNSWERS TO QUESTIONS 1. Accounting for research and development costs. Moderate Moderate Moderate Moderate Complex Moderateĭevelopment costs. ![]() Accounting for franchise, patents, and trade name. Accounting for patents, franchises, and R&D. Recording and amortization of intangibles. Identify the conceptual issues related to research and development costs.ĭescribe the accounting for research and development and similar costs. Identify the costs to include in the initial valuation of intangible assets.Įxplain the procedure for amortizing intangible assets.Įxplain the conceptual issues related to goodwill.ĭescribe the accounting procedures for recording goodwill.Įxplain the accounting issues related to intangible asset impairments. Research and development costs and similar costs.ĪSSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Brief Exercisesĭescribe the characteristics of intangible assets. Patents franchise organization costs trade name. Intangible assets concepts, definitions items comprising intangible assets.ġ, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 25 CHAPTER 12 Intangible Assets ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics ![]()
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