11: In a Set of Financial Statements, What Information Is Conveyed about Intangible Assets?
- Page ID
- 24744
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\(\newcommand{\avec}{\mathbf a}\) \(\newcommand{\bvec}{\mathbf b}\) \(\newcommand{\cvec}{\mathbf c}\) \(\newcommand{\dvec}{\mathbf d}\) \(\newcommand{\dtil}{\widetilde{\mathbf d}}\) \(\newcommand{\evec}{\mathbf e}\) \(\newcommand{\fvec}{\mathbf f}\) \(\newcommand{\nvec}{\mathbf n}\) \(\newcommand{\pvec}{\mathbf p}\) \(\newcommand{\qvec}{\mathbf q}\) \(\newcommand{\svec}{\mathbf s}\) \(\newcommand{\tvec}{\mathbf t}\) \(\newcommand{\uvec}{\mathbf u}\) \(\newcommand{\vvec}{\mathbf v}\) \(\newcommand{\wvec}{\mathbf w}\) \(\newcommand{\xvec}{\mathbf x}\) \(\newcommand{\yvec}{\mathbf y}\) \(\newcommand{\zvec}{\mathbf z}\) \(\newcommand{\rvec}{\mathbf r}\) \(\newcommand{\mvec}{\mathbf m}\) \(\newcommand{\zerovec}{\mathbf 0}\) \(\newcommand{\onevec}{\mathbf 1}\) \(\newcommand{\real}{\mathbb R}\) \(\newcommand{\twovec}[2]{\left[\begin{array}{r}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\ctwovec}[2]{\left[\begin{array}{c}#1 \\ #2 \end{array}\right]}\) \(\newcommand{\threevec}[3]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\cthreevec}[3]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \end{array}\right]}\) \(\newcommand{\fourvec}[4]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\cfourvec}[4]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \end{array}\right]}\) \(\newcommand{\fivevec}[5]{\left[\begin{array}{r}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\cfivevec}[5]{\left[\begin{array}{c}#1 \\ #2 \\ #3 \\ #4 \\ #5 \\ \end{array}\right]}\) \(\newcommand{\mattwo}[4]{\left[\begin{array}{rr}#1 \amp #2 \\ #3 \amp #4 \\ \end{array}\right]}\) \(\newcommand{\laspan}[1]{\text{Span}\{#1\}}\) \(\newcommand{\bcal}{\cal B}\) \(\newcommand{\ccal}{\cal C}\) \(\newcommand{\scal}{\cal S}\) \(\newcommand{\wcal}{\cal W}\) \(\newcommand{\ecal}{\cal E}\) \(\newcommand{\coords}[2]{\left\{#1\right\}_{#2}}\) \(\newcommand{\gray}[1]{\color{gray}{#1}}\) \(\newcommand{\lgray}[1]{\color{lightgray}{#1}}\) \(\newcommand{\rank}{\operatorname{rank}}\) \(\newcommand{\row}{\text{Row}}\) \(\newcommand{\col}{\text{Col}}\) \(\renewcommand{\row}{\text{Row}}\) \(\newcommand{\nul}{\text{Nul}}\) \(\newcommand{\var}{\text{Var}}\) \(\newcommand{\corr}{\text{corr}}\) \(\newcommand{\len}[1]{\left|#1\right|}\) \(\newcommand{\bbar}{\overline{\bvec}}\) \(\newcommand{\bhat}{\widehat{\bvec}}\) \(\newcommand{\bperp}{\bvec^\perp}\) \(\newcommand{\xhat}{\widehat{\xvec}}\) \(\newcommand{\vhat}{\widehat{\vvec}}\) \(\newcommand{\uhat}{\widehat{\uvec}}\) \(\newcommand{\what}{\widehat{\wvec}}\) \(\newcommand{\Sighat}{\widehat{\Sigma}}\) \(\newcommand{\lt}{<}\) \(\newcommand{\gt}{>}\) \(\newcommand{\amp}{&}\) \(\definecolor{fillinmathshade}{gray}{0.9}\)- 11.1: Identifying and Accounting for Intangible Assets
- This page discusses the significance of intangible assets, including their characteristics and accounting processes like acquisition and amortization. It highlights the shift towards valuing intangibles, such as goodwill and copyrights, in financial reporting due to the rise of technology companies. Both U.S.
- 11.2: The Balance Sheet Reporting of Intangible Assets
- This page highlights the importance of historical cost in accounting for intangible assets like trademarks and patents, noting the potential misrepresentation of financial health when costs are lower than market value. It contrasts this with the push for fair value reporting, despite its risks.
- 11.3: Recognizing Intangible Assets Owned by a Subsidiary
- This page discusses the recognition and reporting of intangible assets, particularly goodwill, by parent companies acquiring subsidiaries under U.S. GAAP. It explains that subsidiary intangibles can be recognized if they are identifiable and meet certain criteria. Goodwill reflects excess payments beyond identifiable assets and is not amortized, but it must undergo annual impairment testing.
- 11.4: Accounting for Research and Development
- This page discusses the U.S. GAAP treatment of research and development (R&D) costs, requiring them to be expensed as incurred, which simplifies reporting but may undervalue assets in sectors like technology and pharmaceuticals. It contrasts this with IFRS, which permits capitalizing development costs. The text highlights the difficulties in representing the future value of R&D investments and its impact on financial reporting.
- 11.5: Acquiring an Asset with Future Cash Payments
- This page explains the calculation of historical cost for intangible assets using present value computations, focusing on a $50,000 payment for a copyright that includes principal and implicit interest. It details how to compute present value for annuities, providing an example of $10,000 annual payments totaling $40,374 for the asset and $9,626 as interest. Additionally, it emphasizes the importance of distinguishing between principal and interest in accounting. An interview with Kevin G.
- 11.6: End-of-Chapter Exercises
- This page covers key concepts about intangible assets, including their definitions, examples, reporting, amortization, and goodwill. It outlines important accounting practices related to acquisitions, such as journal entries for a music copyright purchase, highlighting payment structures as annuities. Additionally, it includes examples of financial activities from a company named Webworks, which involve various transactions and adjustments, leading to the preparation of financial statements.