Академический Документы
Профессиональный Документы
Культура Документы
EDITION, 2/E
Chapter 12
12-1
Coby Harmon
University of California, Santa Barbara
Westmont College
PREVIEW OF CHAPTER 12
Intermediate Accounting
IFRS 2nd Edition
Kieso, Weygandt, and Warfield
12-2
12
Intangible Assets
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
Coca-Cola Companys
(USA) success comes
from its secret formula
for making Coca-Cola,
not its plant facilities.
1. Identifiable.
2. Lack physical existence.
3. Not monetary assets.
12-4
Patent
Copyright
Customer list
Franchise or license
Goodwill
LO 1
12
Intangible Assets
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the characteristics of intangible
assets.
12-6
Recorded at cost.
Purchase price.
Legal fees.
12-7
LO 2
12-8
ILLUSTRATION 12-1
Research and
Development Stages
LO 2
12
Intangible Assets
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the characteristics of intangible
assets.
12-10
Useful life should reflect the periods over which the asset
will contribute to cash flows.
12-11
No amortization.
LO 3
12-12
ILLUSTRATION 12-2
Accounting Treatment
for Intangibles
LO 3
12
Intangible Assets
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the characteristics of intangible
assets.
12-14
(1) Marketing-related.
(4) Contract-related.
(2) Customer-related.
(5) Technology-related.
(3) Artistic-related.
(6) Goodwill.
LO 4
Examples:
12-15
No amortization.
LO 4
12-16
LO 4
Examples:
12-17
LO 4
12-18
Jan. 1
2015
Customer List
6,000,000
Cash
6,000,000
Dec. 31
2015
2016
2017
Amortization Expense
Customer List *
* or Accumulated Amortization
2,000,000
2,000,000
LO 4
Examples:
12-19
Mickey
Mouse
LO 4
Examples:
12-20
LO 4
Examples:
12-21
LO 4
Patents
Cash
Dec. 31
180,000
180,000
9,000
9,000
LO 4
12
Intangible Assets
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the characteristics of intangible
assets.
LO 5
RECORDING GOODWILL
Illustration: Feng, Inc. decides that it needs a parts division to
supplement its existing tractor distributorship. The president of Feng
is interested in buying Tractorling Company. The illustration presents
the statement of financial position of Tractorling Company.
ILLUSTRATION 12-4
12-25
LO 5
RECORDING GOODWILL
Illustration: Feng investigates Tractorlings underlying assets to
determine their fair values.
ILLUSTRATION 12-5
LO 5
RECORDING GOODWILL
Illustration: Determination of Goodwill.
ILLUSTRATION 12-6
12-27
LO 5
RECORDING GOODWILL
Illustration: Feng records this transaction as follows.
Property, Plant, and Equipment 205,000
Patents
18,000
Inventory
122,000
25,000
Goodwill
50,000
Liabilities
Cash
12-28
55,000
400,000
LO 5
RECORDING GOODWILL
Goodwill Write-Off
Bargain Purchase
12-29
LO 5
12
Intangible Assets
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the characteristics of intangible
assets.
12-31
LO 6
12-32
LO 6
5,000,000
2,000,000
Unknown
12-33
2,000,000
LO 6
5,000,000
2,000,000
3,000,000
3,000,000 Unknown
$2,000,000
LO 6
12-35
LO 6
12-36
150,000
LO 6
12-37
LO 6
ILLUSTRATION 12-9
Computation of Loss on
Impairment of Broadcast License
12-38
LO 6
12-39
LO 6
12-40
LO 6
ILLUSTRATION 11-15
$2,400,000
$2,800,000
No
Impairment
Unknown
12-41
$2,800,000
LO 6
$2,400,000
$1,900,000
Unknown
12-42
$1,900,000
LO 7
6
$2,400,000
$1,900,000
500,000
500,000
Unknown
$1,900,000
LO 7
6
12
Intangible Assets
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the characteristics of intangible
assets.
12-45
product,
formula,
process,
composition, or
idea,
literary work.
LO 7
12-46
LO 7
12-47
LO 7
12-48
ILLUSTRATION 12-13
Research Activities versus
Development Activities
Research
Research Activities
Activities
Examples
Examples
Original
Original and
and planned
planned investigation
investigation
undertaken
undertaken with
with the
the prospect
prospect of
of gaining
gaining
new
scientific
or
technical
knowledge
new scientific or technical knowledge
and
and understanding.
understanding.
Laboratory
Laboratory research
research aimed
aimed at
at discovery
discovery of
of
new
new knowledge;
knowledge; searching
searching for
for applications
applications of
of
new
research
findings.
new research findings.
Development
Development Activities
Activities
Examples
Examples
Application
Application of
of research
research findings
findings or
or other
other
knowledge
knowledge to
to a
a plan
plan or
or design
design for
for the
the
production
of
new
or
substantially
production of new or substantially
improved
improved materials,
materials, devices,
devices, products,
products,
processes,
processes, systems,
systems, or
or services
services before
before
the
the start
start of
of commercial
commercial production
production or
or
use.
use.
Conceptual
Conceptual formulation
formulation and
and design
design of
of
possible
possible product
product or
or process
process alternatives;
alternatives;
construction
of
prototypes
and
construction of prototypes and
operation
operation of
of pilot
pilot plants.
plants.
LO 7
12-49
Source: L. Cutler, D. Sayuk, and Camille Shoff, Global R&D Incentives Compared, Journal of
Accountancy (June 2013).
LO 7
12
Intangible Assets
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the characteristics of intangible
assets.
12-51
Personnel.
Purchased intangibles.
Contract Services.
Indirect Costs.
LO 8
Item
Item
Classification
Classification
1.
1.
Long-term investments
2.
Timberland.
2.
PP&E
3.
3.
R&D expense
4.
4.
Prepaid rent
5.
5.
PP&E
6.
6.
R&D expense
12-52
LO 8
Classification
Classification
7.
7.
Expense
8.
8.
Operating loss
9.
9.
Expense
10. Intangible
12-53
LO 8
Classification
Classification
of
13. Intangible
14. R&D expense
an
15. Intangible
16. Intangible
17. Intangible
12-54
LO 8
Classification
Classification
19. Intangible
20. Intangible
22. Expense
23. Intangible
12-55
LO 8
LO 8
Advertising costs.
12-57
LO 8
R&D
Expense
$330,000
$66,000
59,000
59,000
100,000
100,000
128,000
128,000
50,000
50,000
34,000
$403,000
12-58
LO 8
BRANDED
For many companies, developing a strong brand image is as important as developing the products
they sell. Now more than ever, companies see the power of a strong brand, enhanced by significant
and effective advertising investments. As the following chart indicates, the value of brand
investments is substantial. Coca-Cola (USA) heads the list with an estimated brand value of about $78
billion. Companies from around the globe are represented in the top 20 brands.
Occasionally, you may find the value of a brand included in a companys financial statements under
goodwill. But generally you will not find the estimated values of brands recorded in companies
statements of financial position. The reason? The subjectivity that goes into estimating a brands value.
In some cases, analysts base an estimate of brand value on opinion polls or on some multiple of ad
spending. For example, in estimating the brand values shown above, Interbrand Corp. (USA)
estimates the percentage of the overall future revenues the brand will generate and then discounts the
net cash flows, to arrive at a present value. Some analysts believe that information on brand values is
relevant. Others voice valid concerns about the reliability of brand value estimates due to subjectivity in
the estimates for revenues, costs, and the risk component of the discount rate.
12-59
LO 8
12
Intangible Assets
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Describe the characteristics of intangible
assets.
PRESENTATION OF INTANGIBLES
Presentation of Intangible Assets
Statement of Financial Position
12-61
LO 9
PRESENTATION OF INTANGIBLES
Presentation of Intangible Assets
Income Statement
Companies should report
LO 9
PRESENTATION OF INTANGIBLES
Presentation of Intangible Assets
ILLUSTRATION 12-15
Nestls Intangible Asset
Disclosures
12-63
LO 9
PRESENTATION OF INTANGIBLES
Presentation of Research and Development
Costs
Companies should disclose the total R&D costs charged to
expense each period.
ILLUSTRATION 12-16
R&D Reporting
12-64
LO 9
12-65
12-66
12-67
12-69
12-71
12-72
COPYRIGHT
Copyright 2014 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted in
Section 117 of the 1976 United States Copyright Act without the
express written permission of the copyright owner is unlawful.
Request for further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc. The purchaser
may make back-up copies for his/her own use only and not for
distribution or resale. The Publisher assumes no responsibility for
errors, omissions, or damages, caused by the use of these
programs or from the use of the information contained herein.
12-73