Intangible Asset

The Uniform Commercial Code (Section 9-102(a)(42)) defines "general intangibles" as

:"any Personal Property ...other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter of credit rights, letters of credit, money, and oil, gas, or other minerals before extraction. The term includes payment intangibles and Software ."

RESEARCH & DEVELOPMENT

Millions are spent each year by corporations to research and develop new intangible assets. To protect their research and development (R&D) efforts, corporations generally rely on Intellectual Property Law s and unfair competition laws.

FINANCIAL ACCOUNTING

General standards

The Financial Accounting Standards Board (FASB) offers some guidance as to how intangible assets should be accounted for in Financial Statement s. In general, intangibles that are developed internally are not recognized and intangibles that are purchased from third-parties are recognized.

Expense recognition

Intangible assets are typically expensed according to their respective life expectancy. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are Amoritized on a straight-line basis over their economic or legal life, whichever is shorter. Examples of intangible assets with identifiable useful lives include copyrights and patents. Intangible assets with indefinite useful lives are reassessed each year for impairment. If an impairment has occurred, then a loss must be recognized. An impairment loss is determined by subtracting the asset's fair value from the asset's book/carrying value. This impairment loss may only be reversed under certain circumstances. Trademarks and goodwill are examples of intangible assets with indefinite useful lives.

SEE ALSO

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Intangible Asset