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Int. Acct. I
Chapter 11: Intangible Assets
| Term | Definition |
|---|---|
| intangible assets | lack physical existence , long-term assets, and are not financial instruments |
| intangible assets | derive their value from the rights and privileges granted to the company, including such items as brands, licenses, franchises, patents, other intellectual property, and goodwill |
| limited-life intangibles | Amortized by systematic charges over their useful lives |
| bargain purchase | the purchaser in a business combination pays less than the fair value of the identifiable net assets, results in a gain |
| business combination | (transaction in which the purchaser obtains control of one or more businesses) |
| copyright | a federally granted right that all authors, painters, musicians, sculptors, and other artists have in their creations and expressions |
| development activities | translation of research findings or other knowledge into a plan or design for a new product or process, or for a significant improvement to an existing product or process whether intended for sale or use |
| fair value test | If the intangible asset is impaired, the impairment amount is calculated as follows. Carrying value of intangible asset less fair value of intangible asset = impairment loss |
| franchise | a contractual arrangement under which the franchisor grants the franchisee the right to sell certain products or services, to use certain trademarks or trade names, or to perform certain functions, usually within a designated geographical area |
| goodwill | measured as the excess of the cost of the purchase over the fair value of the identifiable net assets (assets less liabilities) purchased |
| impairment | the review of loss in fair value |
| indefinite-life intangibles | no foreseeable limit on the period of time over which the intangible asset is expected to provide cash flows; do not amortize |
| licenses (permit) | operating rights granted by a governmental body |
| master valuation approach | the cost of which “is measured by the difference between the cost of the group of assets or enterprise acquired and the sum of the assigned costs of individual tangible and identifiable intangible assets acquired less liabilities assumed |
| organizational costs | legal and state fees incurred to organize a new business entity |
| patent | gives the holder exclusive right to use, manufacture, and sell a product or process for a period of 20 years without interference or infringement by others |
| recoverability test | the company estimates the future cash flows (undiscounted) expected from the use of the asset and its eventual disposal, then makes the following comparison and conclusions |
| research activities | planned search or critical investigation aimed at discovery of new knowledge |
| research and development (R&D) costs | not in themselves intangible assets; R&D activities frequently result in the development of patents or copyrights (such as a new product, process, idea, formula, composition, or literary work) that may provide future value. |
| start-up costs | incurred for one-time activities to start a new operation |
| trademark, trade name | a word, phrase, or symbol that distinguishes or identifies a particular company or product |
Created by:
ryanriggs18
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