Accountants' Handbook Volume One: Financial Accounting and General Topics, Eleventh Edition

Chapter 22. GOODWILL AND OTHER INTANGIBLE ASSETS^[352]

Lailani Moody, CPA, MBA

Grant Thornton LLP

CHARACTERIZATION OF INTANGIBLE ASSETS

Intangible assets are assets, other than financial assets, that have utility and value but lack physical substance. Examples include patents, copyrights, trade names, customer lists, royalty agreements, databases, and computer software. Intangible assets can be classified as identifiable, for example, trademarks, or unidentifiable, for example, goodwill. Another way to classify intangible assets is based on how they are acquired. They can be internally developed or acquired from external sources. Intangibles acquired externally can be further categorized depending on whether they are acquired in a business combination or as a separate asset or together with other assets that do not constitute a business. Intangible assets acquired in a business combination may be recognized as assets separate from goodwill or as part of goodwill, depending on whether the intangible assets satisfy certain criteria. As discussed in this chapter, the applicable accounting pronouncements and accounting requirements differ somewhat depending on whether the intangible asset is identifiable, whether it is internally developed or acquired externally, and, if acquired externally, whether it was acquired in a business combination.

Intangible assets can also be classified by methods other than identifiability. Accounting Principles Board (APB) Opinion No. 17 (par. 10) indicates ...