中級(jí)財(cái)務(wù)會(huì)計(jì)英文ch07課件

IntangibleAssetsChapter7IntermediateAccounting12thEditionKieso,Weygandt,andWarfield

PreparedbyCobyHarmon,UniversityofCalifornia,SantaBarbaraDescribethecharacteristicsofintangibleassets.Identifythecoststoincludeintheinitialvaluationofintangibleassets.Explaintheprocedureforamortizingintangibleassets.Describethetypesofintangibleassets.Explaintheconceptualissuesrelatedtogoodwill.Describetheaccountingproceduresforrecordinggoodwill.Explaintheaccountingissuesrelatedtointangible-assetimpairments.Identifytheconceptualissuesrelatedtoresearchanddevelopmentcosts.Describetheaccountingforresearchanddevelopmentandsimilarcosts.Indicatethepresentationofintangibleassetsandrelateditems.LearningObjectivesIntangibleassets

arethosenoncurrenteconomicresourcesthatareusedintheoperationsofthebusinessbuthavenophysicalexistence.PatentsCopyrightsFranchisesIntangibleAssetsIntangibleassets

arethosenoncurrenteconomicresourcesthatareusedintheoperationsofthebusinessbuthavenophysicalexistence.Trademarks?aregisteredtrademarkComputersoftwarecostsGoodwillIntangibleAssetsIntangible

AssetsLackphysical

substance.Economicbenefits

lastbeyondthe

currentperiod.Usefullifeis

oftendifficult

todetermine.Usuallyacquired

foroperational

use.IntangibleAssetsMannerofacquisitionIdentifiabilityExchangeabilityPeriodofexpectedbenefitPatentPendingIntangibleAssets

ClassificationAttributesAtacquisition:recordatcost.Duringuse:usethe

matchingprinciple

toallocatecosttoexpense.Atdisposition:usethe

revenuerecognition

principletorecordanygain

orlossthatmightresult.IntangibleAssets

AccountingRecordatcurrentcashequivalentcost,includingpurchaseprice,transfer,andlegalfees.Iftheassetisacquiredthroughanonmonetaryexchange,costis-cashpaid,plus-thecurrentmarketvalueofthenoncashconsiderationgiven.IntangibleAssetsDeterminationofCostIftheassetiscreatedinternally,thecostmayinclude-onlythecostsdirectlyassociatedwiththecreationoftheintangibleasset.CostsclassifiedasR&Dmustbeexpensedintheperiodincurred.-SFASNo.2IntangibleAssetsDeterminationofCostIntangiblesarewrittenoffovertheirusefullives,wheretheassetshave

determinableusefullives.Wheretheintangibleshaveindefinite

usefullives,theyarenotamortized.Acquiredintangiblesshouldnotbewrittenoffatacquisition.IntangibleAssetsAmortizationofCostLegal,regulatory,orcontractualprovisionsthatplacealimitonthemaximumeconomiclife.Provisionsforrenewalorextensionofrightsorprivilegescoveredbyspecificintangibleassets.Effectsofobsolescence,customerdemand,competition,rateoftechnologicalchange,andothereconomicfactors.Factorstoconsiderwhenestimatingtheusefullifeofanintangibleasset:ContinuedIntangibleAssetsAmortizationofCostPossibilitythattheeconomiclivesofintangiblesmayberelatedtolifeexpectanciesofcertaingroupsofemployees.Expectedactionsofcompetitors,regulatorybodies,andothers.Factorstoconsiderwhenestimatingtheusefullifeofanintangibleasset:IntangibleAssetsAmortizationofCostIntangibleAssetsWithaFiniteLifeAreAmortized.Thecalculationoftheamortizationofintangibleassetsfollowsthesameprinciplesasthedepreciationoftangibleassets.IntangibleAssetsAmortizationofCostAmortizationsystematicallyandrationallyallocatestheacquisitioncostofintangibleassetstoexpense.CostAllocationAcquisition

CostExpenseIntangibleAssetsAmortizationofCostSelectamethodbasedonthepatternofbenefits,ifnotdeterminable,usethestraightlinemethod.Intangibleassetsdonothavearesidualvalue.IntangibleAssetsAmortizationofCostTheentrytorecordamortizationofanintangibleassetincludes:-adebittoAmortizationExpense.-acreditdirectlytotheintangibleassetaccount.IntangibleAssetsAmortizationofCostAcompanypurchasesapatentfor$85,000.Patent 85,000Cash 85,000Atyear-endthepatentisamortizedover10years(noexpectedresidualvalue).AmortizationExpense(orFactoryOverhead) 8,500Patent(orAccumulatedAmortization:Patent) 8,500IntangibleAssetsAmortizationofCostAnexclusiverightrecognizedbylawandregisteredwiththeUSPatentOffice.Theholderisallowedtouse,manufacture,sell,andcontroltheitem,process,oractivitywithoutinterferenceorinfringementbyothers.PatentsCostsofpurchasingpatentsarecapitalized.Coststoresearchanddeveloppatentsareexpensedasincurred.Patentsareamortizedovertheshorterofthelegallife(20years)ortheirusefullives.Legalfeesincurredtosuccessfullydefendpatentsarecapitalized.PatentsBatter-Up,Inc.hasdevelopedanewdevice.Patentregistrationcostsconsistedof$2,000inattorneyfeesand$1,000infederalregistrationfees.WhatisBatter-Up’samortizablecost?Patents

QuestionBatter-Up,Inc.hasdevelopedanewdevice.Patentregistrationcostsconsistedof$2,000inattorneyfeesand$1,000infederalregistrationfees.WhatisBatter-Up’samortizablecost?Batter-Up’scostforthenew

patentis$3,000.Patents

QuestionBatter-Uphasestimatedthatthedevicehasausefullifeof5years.Thelegallifeis20years.Attheendofyear1,whatisBatter-Up’samortizationexpense?Patents

QuestionBatter-Uphasestimatedthatthedevicehasausefullifeof5years.Thelegallifeis20years.Attheendofyear1,whatisBatter-Up’samortizationexpense?Usetheshorterofusefullifeorlegallife;5years.Amortization=Cost÷Est.UsefulLife=$3,000÷5years=$600Patents

QuestionPreparetheadjustingentrytorecordBatter-Up’samortizationexpensefortheperiod.Patents

QuestionPreparetheadjustingentrytorecordBatter-Up’samortizationexpensefortheperiod.Patents

QuestionAformofprotectiongivenbylawtoauthorsofliterary,musical,artistic,andsimilarworks.Copyrightownershaveexclusiverightstoprint,reprint,copy,sellordistribute,performandrecordthework.CopyrightsCopyrightsaregrantedforlifeofthecreatorplus70years.Copyrightscanbesoldorassigned,butcannotberenewed.Copyrightsareamortizedovertheirusefullife.Costsofacquiringcopyrightsarecapitalized.Researchanddevelopmentcostsinvolvedareexpensedasincurred.CopyrightsAsymbol,design,orlogoassociatedwithabusiness.Trademarks

andtradenames

arerenewableindefinitelybytheoriginaluserinperiodsof10yearseach.TrademarksandTradeNamesCostsofacquiredtrademarksortradenamesarecapitalized.Iftrademarksortradenamesaredevelopedbytheabusiness,alldirectcosts(exceptR&Dcosts)arecapitalized.TrademarksandTradeNamesAfranchiseisacontractualagreementunderwhich:

Thefranchisorgrantsthefranchisee:therighttosellcertainproductsorservices,therighttousecertaintrademarksortradenames,ortherighttoperformcertainfunctions,withinacertaingeographicalarea.FranchisesandLicensesAfranchisemaybeforalimitedtime,foranindefinitetimeperiod,orperpetual.Thecostofafranchise(foralimitedtime)isamortizedoverthefranchiseterm.Afranchise(foranunlimitedtime)iscarriedatcostandnotamortized.Annualpaymentsforafranchiseareexpensed.FranchisesandLicensesRepresentsthevalueassociatedwithfavorablecharacteristicsofafirmthatresultinearningsinexcessofthoseexpectedfromidentifiableassetsofthefirm.Formanylargefirms,goodwillisamajorreportedasset.IntangibleAssets

GoodwillGoodwillisalwayspresent,butisonlyrecordedwhenonecompanycombineswithanothercompany.Goodwillistheexcessoftheactualpurchasepriceofanacquiredfirmoverthefairmarketvalue(FMV)oftheidentifiablenetassetsacquired.IntangibleAssets

GoodwillEddyCompanypaid$1,000,000topurchaseallofJamesCompany’sassetsandassumedJamesCompanyliabilitiesof$200,000.JamesCompany’sassetswereappraisedatafairvalueof$900,000.IntangibleAssets

GoodwillExampleWhatamountofgoodwillshouldberecordedonEddyCompanybooks? a. $100,000 b. $200,000 c. $300,000 d. $400,000Goodwill

QuestionWhatamountofgoodwillshouldberecordedonEddyCompanybooks?

a. $100,000 b. $200,000

c. $300,000

d. $400,000Goodwill

QuestionIndividualassetsandliabilitiesactuallywouldbedebitedorcredited.SaraCompanypurchasesalltheassetsofTrevorCompanyfor$790,000cashandTrevorCompanyisdissolved.TrevorCompany’sidentifiableassetshadafairvalueof$920,000anditsliabilitiestotaled$200,000.Assets 920,000Goodwill 70,000Liabilities 200,000Cash 790,000Goodwill

ExampleFairvalueofnetassetsacquiredishigherthanpurchasepriceofassets.Resultingcreditisnegativegoodwill(badwill).FASBrequiresthatanyremainingexcessberecognizedasanextraordinarygain.NegativeGoodwillAcquiredgoodwillhasanindefinitelifeandshouldnotbeamortizedbutissubjecttoimpairment.Impairmenttestshouldbeperformedatleastannually.Ifapplicable,lossrecorded.GoodwillWrite-OffAnimpairmentoccurswhen:--thecarryingamountofanassetisnotrecoverable,and--awrite-offoftheimpairedamountisneededTodeterminetheamountofimpairment,arecoverabilitytestisused.ImpairmentsofIntangiblesTypeofAssetProperty,Plant&EquipmentLimitedLiveIntangibleIndefinite-lifeintangible,otherthangoodwillGoodwillImpairmentTestsRecoverabilitytest,thenfairvaluetestRecoverabilitytest,thenfairvaluetestFairvaluetestFairvaluetestonreportingunit,thenfairvaluetestonimpliedgoodwillImpairmentTestsImpairment?SumofexpectedfuturenetcashflowsfromuseanddisposalofassetislessthanthecarryingamountSumofexpectedfuturenetcashflowsfromuseanddisposalofassetisequaltoormorethanthecarryingamountImpairmenthasoccurredNoimpairmentImpairments:TheRecoverabilityTestImpairmenthasoccurredLoss=CarryingamountlessFairvalueofassetDoesanactivemarketexistfortheasset?DetermineimpairmentlossYes

No

Loss=CarryingamountlesspresentvalueofexpectednetcashflowsUsecompany’smarketrateofinterestImpairments:MeasuringLoss

Loss=CarryingvaluelessFairvalue

Amortizenewcostbasis

RestorationofimpairmentlossisNOTpermittedImpairment:Accounting

Comparesfairvalueofintangibleassetwith

assets'carryingamount.

Iffairvaluelessthancarryingamount,

impairmentrecognized.ImpairmentTest:FairValueTest

Thefairvalueofthereportingunitshouldbecomparedtoitscarryingamountincludinggoodwill.Thefairvalueofthegoodwillmustbedeterminedandcomparedtoitscarryingamount.ImpairmentofGoodwillTheKentCompanyacquiredtheDevonCompanyasasubsidiaryseveralyearsago.TheDevonCompanyhasa

bookvalueof$3.6million,includinggoodwillof$400,000.KentnowCompany

estimatesthatits

fairvalueis$3million.IfKentCompanyallocates

$2.7millionofthefairmarketvaluetoDevonCompany’s

identifiableassetsandliabilities,thismeansthat$300,000isimpliedforgoodwill.Thus,therehasbeenanimpairmentlossof$100,000.ImpairmentofGoodwillImpairmentLossonGoodwill 100,000 Goodwill 100,000

BookValue

FairValueNetAssets $3,200,000 $2,700,000

Goodwill 400,000

300,000Total $3,600,000 $3,000,000ImpairmentofGoodwillResearch--PlannedsearchorcriticalinvestigationaimedatdiscoveryofnewknowledgeDevelopment--ThetranslationofresearchfindingsorotherknowledgeintoaplanordesignforanewproductorprocessorforasignificantimprovementtoanexistingproductorprocesswhetherintendedforsaleoruseResearchandDevelopmentCostsR&Dcostsareexpensedasincurred.MaterialR&Dcostsmustbedisclosed.Equipment,facilities,andpurchasedintangiblesrelatedtotheresearchshouldbecapitalized...

...ifthoseitemshavealternativefutureuses.ResearchandDevelopmentCostsBatter-Up,Inc.hasdevelopedanewdevice.Researchanddevelopmentcoststotaled$30,000.Patentregistrationcostsconsistedof$2,000inattorneyfeesand$1,000infederalregistrationfees.

WhatisBatter-Up