February 2007
Intermediate to advanced
288 pages
6h 32m
English
book
Crash Course in Accounting and Financial Statement Analysis, Second Edition
by Matan Feldman, Arkady Libman
Content preview from Crash Course in Accounting and Financial Statement Analysis, Second Edition
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Summary: Intangible Assets and Goodwill
Intangible assets are comprised of nonphysical acquired assets—brand, franchise, trademarks, patents, customer lists, licenses—that have value based on the rights belonging to the company that had purchased them. Intangible assets are amortized, just like fixed assets are depreciated, over their useful lives on the income statement (Exhibit 6.10).
| Type of Intangible Asset | Overview | Accounting Treatment | Tax Treatment |
|---|---|---|---|
| Patent | Exclusive right from the federal government to sell a product or process for a 17-year period | Amortization over useful life (up to 17 years) | Tax-deductible (income statement) |
| Copyright | A registered symbol or name reserved exclusively for its owner for an indefinite number of periods (renewed every 20 years) | Amortization over useful life (not to exceed 40 years) | Tax-deductible (income statement) |
| Trademarks and Brand Names | A registered symbol or name reserved exclusively for its owner for an indefinite number of periods (renewed every 20 years) | Amortization over useful life (not to exceed 40 years) | Tax-deductible (income statement) |
| Leaseholds | A long-term rental contract for the right to occupy land or buildings | Amortization over useful life of the lease | Tax-deductible (income statement) |
| Franchises and Licenses | A right to an exclusive manufacture or sale of products or services | Amortization over useful life (not to exceed 40 years) | Tax-deductible (income statement) |
| Goodwill ... |
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