Accounting for Goodwill and Other Intangible Assets

CHAPTER 5Financial Statement Presentation and Disclosures

A. Financial Statement Presentations

ASC 350 specifies the presentation requirements for goodwill and other intangible assets, both those with finite lives and those with indefinite lives. This chapter examines the financial statement presentation and disclosures of ASC 350 through a fictitious company, PRV Corp.

1. Required Financial Statement Presentation for Intangible Assets

U.S. GAAP permits but does not require each class of intangible assets to be separately stated in the statement of financial position; it is adequate for all the intangible assets to be aggregated and presented as a single line item.¹ In contrast, SEC registrants must separately state each class of intangible assets that exceeds 5 percent of the total assets, along with the basis of determining the respective amounts, and disclose any significant addition or deletion.²

Under U.S. GAAP, the amortization expense and impairment losses³ for intangible assets must be presented in income statement line items within continuing operations unless the asset is part of a discontinued operation.⁴

Example

Exhibit 5.1 illustrates the application of the requirements for the hypothetical PRV Corp. In this situation, PRV acquired SB Co. The original amount of Intangible Assets (for a customer list) was recorded at fair value of $800,000 on January 1, 20X5. The expected useful life for the customer list is five years, so it is amortized over five years ...