iheartopf.blogg.se - Intangible assets from acquisition

If a defense of a patent against infringement is successful, the net cost incurred should be capitalized because it will benefit future periods.įor example, if $30,000 of legal fees are incurred, the following journal entry would be made: Purchased Unidentifiable Intangibles There are no significant accounting problems related to purchased identifiable intangible assets that are not also encountered for tangible assets.įor example, if a patent is acquired by Sample Company by giving 10,000 shares of its $10 par value common stock known to be worth S18 per share, the following journal entry is: Recognize asset only when acquired with other identifiable assetsĬost equals excess of total paid over fair values of identifiable assetsĬost includes only amounts paid to protect the right or ability Internally generated unidentifiable intangiblesĬost includes all amounts paid to obtain and protect the right or ability.Internally generated identifiable intangibles.

The practices vary among the four categories of intangibles:

Costs to maintain legal protection for the right or abilityīecause the costs of categories 1, 4, and 5 usually involve external transactions, judgments are more easily made about them than about categories 2 and 3.Ī summary is given of the relevant GAAP for these assets in the matrix in the below example.

Costs to obtain legal protection for the right or ability.

Costs to obtain knowledge relating to using the ability (development).

Costs to obtain basic knowledge to create an ability (research).

Costs paid to purchase the right or ability.

GAAP limits this figure to historical cost.ĭepending on the situation, there are several cost factors that should be considered: If an intangible asset is believed to exist, the next question is what amount should be associated with it. In this latter situation, judgment must be carefully exercised.Īuthoritative bodies have resisted establishing rules because of the near impossibility of anticipating every situation.Ĭonsequently, identifiable assets are more commonly recognized than goodwill. Secondary evidence is provided by cash inflows created by the asset.

The primary evidence that should be sought is documentation of either legal protection or a contract. When deciding how to account for an intangible asset, the first question to answer is whether there is sufficient proof that it actually exists.