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{"id":1385,"date":"2024-05-15T09:29:55","date_gmt":"2024-05-15T09:29:55","guid":{"rendered":"http:\/\/temp1.manatec.in\/?p=1385"},"modified":"2025-07-23T22:38:34","modified_gmt":"2025-07-23T22:38:34","slug":"intangible-assets-financial-accounting-3","status":"publish","type":"post","link":"https:\/\/temp1.manatec.in\/?p=1385","title":{"rendered":"Intangible Assets Financial Accounting"},"content":{"rendered":"

The intangible asset goodwill is not amortized. Goodwill is to be tested periodically for impairment. The amount of any goodwill impairment loss is to be recognized in the income statement as a separate line before the subtotal income from continuing operations (or similar caption).<\/p>\n

Intangible Asset Value = Acquisition Cost – Accumulated Amortization (for assets with a finite life).<\/h2>\n

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And both show the real cost of running the business. Proper records help when companies sell, merge, or go public. They also help banks and investors decide value and risk. Each intangible asset helps the company only for a time. This is the expensing of intangible assets is called<\/a> called the useful life of intangible assets.<\/p>\n

What Is Brand Equity?<\/h2>\n

For example, a company may create a mailing list of clients or establish a patent. It can write off the expenses from the process, such as filing the patent application, hiring a lawyer, and paying other related costs. Intangible assets are typically expensed according to their respective life expectancy.<\/p>\n

Good software can give alerts when the value falls or the license ends. Also, intangible assets, GAAP clearly states how amortisation must be done. This helps in audits and overseas dealings. Following this keeps businesses safe and reliable.<\/p>\n

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Understanding Depreciation on Intangible Assets<\/h2>\n

Intangible assets can be difficult to value. Intangible assets increase through acquisitions (such as purchasing patents or licenses), investment in intellectual property, or the development of proprietary technologies. Another source is the creation of goodwill through mergers and acquisitions. After entering the books, the value must be reduced each year. This is called intangible asset amortisation. It matches the expense to the year in which it is earned.<\/p>\n

Applying the Amortisation Journal Entry<\/h2>\n

These assets should contribute to the company\u2019s profitability and future growth. ACCA covers the concept of depreciation on intangible assets under IAS 38 Intangible Assets, forming part of the Financial Reporting (FR) and Strategic Business Reporting (SBR) papers. ACCA students must understand the difference between amortisation and depreciation, how to measure useful life, and how these affect financial statements. It is crucial for compliance, reporting accuracy, and valuation.<\/p>\n

Companies follow strict rules when recording intangible assets. They use intangible assets accounting standards such as AS 26. Only assets bought or created for business use are included. Future profit alone does not count unless linked to a clear asset. Intangible assets are valuable even when they cannot be touched.<\/p>\n