Sunday, December 19, 2010

Patents, Researches, Goodwill and their amortization.

Patents, Researches, Goodwill and their amortization.
Objectives
1. Be familiar with Intangible assets
2. Understand amortization process for intangible assets


Over what time the cost of a purchased Patent should be amortized?
*     The cost of a purchased patents  should be amortized over
   the patent’s expected usefulness     (Warren, 2009, p.254).
What is the required accounting treatment for research and costs?
*     They are accounted for as current operating expenses in
    the period in which they are incurred(Warren, 2009, p.255)
How should Goodwill be amortized?
*     Good will does Not amortize
*     A loss should be recorded if the business 
   prospects of the acquired firm become
   significantly impaired.
*     The loss should be recorded in the  “Other Expenses’ income statement)
   (Warren, 2009, p.256).
 Financial Reporting intangible assets (conclusion)
*             The amount of depreciation and    amortization expenses of a period should 
    be reported separately in the income      statement or disclosed in a note
    (Warren, 2009, p.257).
*      A General description of the methods used   in computing them should be reported
      References
*     Warren, S. C.( 2009).Survey of accounting.
   4th ed. Ohio: South-Western Cengage learning

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