Prepared by

Coby Harmon Revised for 2601513

University of California, Santa Barbara
Westmont College
12-1

Intangible Assets
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Discuss the characteristics,
valuation, and amortization of
intangible assets.
2. Describe the accounting for
various types of intangible
assets.
3. Explain the accounting issues for
recording goodwill.
CHAPTER 12
4. Identify impairment
procedures and presentation
requirements for intangible
assets.
5. Describe the accounting and
presentation for research and
development and similar
costs.

12-2
 PREVIEW OF CHAPTER 12

Intermediate Accounting
IFRS 3rd Edition
Kieso ● Weygandt ● Warfield
12-3
 สินทรัพย์ไม่มีตัวตน
Intangible Asset Issues LEARNING OBJECTIVE 1
Discuss the characteristics,
valuation, and amortization of
intangible assets.
Characteristics
Identifiable. ต้องระบุได้ เช่นจะซื้อลิขสิทธ์เพลง => การซื้อลิขสิทธ์ ~ ระบุได้

Lack physical existence. จับต้องไม่ได้

Christian Dior’s
Not monetary assets.เช่น เงินลงทุน เงินสด (FRA) most
ลูกหนี้การค้า important asset is its
Normally classified as non-current asset. brand image, not its
store fixtures.
Common types of intangibles:

1. Marketing-related. 4. Contract-related.
2. Customer-related. 5. Technology-related.
3. Artistic-related. 6. Goodwill. => Other asset (TAS38)
12-4 LO 1
 Intangible Asset Issues
มูลค่าเริ่มแรกของ Intangible Asset = ราคาซื้อ + ค่าใช้จ่ายที่ทำให้พร้อมใช้งาน
Valuation
Purchased Intangibles
Recorded at cost.

Includes all acquisition costs plus expenditures to make

the intangible asset ready for its intended use.

Typical costs include:

► Purchase price.

► Legal fees.
คชจ จิปาถะ
► Other incidental expenses.
12-5 LO 1
 Valuation

Internally Created Intangibles

Might include patents, computer software, copyrights,
and trademarks.

Companies expense all research phase costs and some

development phase costs.

Certain development costs are capitalized once

economic viability criteria are met.

IFRS identifies several specific criteria that must be met

before development costs are capitalized.

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 Intangible Asset Issues

Internally Created Intangibles

ILLUSTRATION 12.1
Research and Development Stages

12-7 LO 1
 Intangible Asset Issues

Amortization of Intangibles
Limited-Life Intangibles
Amortize by systematic charge to expense over useful life.

Amortization expense should reflect the pattern in which

the company consumes or uses up the asset.

Credit asset account or accumulated amortization.

Amortization should be cost less residual value.

Companies must evaluate the limited-life intangibles

annually for impairment.

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 Intangible Asset Issues

Amortization of Intangibles
Indefinite-Life Intangibles
No foreseeable limit on time the asset is expected to
provide cash flows.

No amortization.

Must test indefinite-life intangibles for impairment at least

annually.
ถ้า Intangible Asset ไม่มีอายุใช้งาน สามารถใช้ได้ตลอด จะไม่ต้องตัดจำหน่าย
แต่ต้อง ทดสอบการด้อยค่า (Impairment Test)

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 Intangible Asset Issues

Amortization of Intangibles

ILLUSTRATION 12.2
Accounting Treatment for Intangibles

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 LEARNING OBJECTIVE 2
Types of Intangible Describe the accounting for
various types of intangible
Assets assets.

Six Major Categories:

1. Marketing-related. 4. Contract-related.

2. Customer-related. 5. Technology-related.

3. Artistic-related. 6. Goodwill.

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 Types of Intangible Assets

Marketing-Related Intangible Assets

Examples:
► Trademarks or trade names, newspaper
mastheads, Internet domain names, and non-
competition agreements.

Under common law, the right to use a trademark or

trade name rests exclusively with the original user
as long as the original user continues to use it.

Capitalize purchase price.

No amortization.
12-12 LO 2
 What Do The Numbers Mean?
Companies go to great extremes to protect
their valuable intangible assets. Consider
how the creators of the highly successful
game Trivial Pursuit protected their creation.
First, they copyrighted the 6,000 questions
that are at the heart of the game. Then, they
shielded the Trivial Pursuit name by
applying for a registered trademark. As a
third mode of protection, they obtained a
design patent on the playing board’s design
as a unique graphic creation.
Another more recent example is the
case of Converse (owned by Nike (USA))
and its eff orts to protect its classic Chuck
Taylor trademark. Converse accused 31
companies (including U.S. companies such
as Wal-Mart Stores, Inc., Kmart, and
Skechers) of trademark infringement for co-
opting its widely recognizable Chuck
12-13
Keep Your Hands Off My Intangible!
Taylor® sneakers. While Converse is
suing for monetary damages, its main
goal is to get these imposters off store
shelves. The company went as far as fi
ling a separate complaint with the
International Trade Commission to stop
any shoes considered to be counterfeit
from entering the country. That Converse
(Nike) is going to these ends to protect its
trademark is understandable given that
Nike reinvigorated the brand by
expanding the franchise, introducing
more colors and styles, and helping to
push All Stars® into overseas markets.
Source: “Converse Sues to Product Its Chuck
Taylor All Stars,” The New Work Times
(October 14, 2014).
LO 2
 Types of Intangible Assets

Customer-Related Intangible Assets

Examples:
► Customer lists, order or production backlogs, and both
contractual and non-contractual customer
relationships.

Capitalize acquisition costs.

Amortized to expense over useful life.

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 ตัดจำหน่าย Intangible
Types of Intangible Assets asset ด้วยวิธีเส้นตรง

Illustration: Green Market AG acquires the customer list of a large

newspaper for €6,000,000 on January 1, 2019. Green Market expects
อย่างเท่าเทียม
to benefit from the information evenly over a three-year period.
Record the purchase of the customer list and the amortization of the
customer list for each year on the straight-line basis.

Jan. 1 Customer List 6,000,000

2019
Cash 6,000,000
ค่าตัดจำหน่าย
Dec. 31 Amortization Expense 2,000,000
2019
Customer List * 2,000,000
2020 Intangible asset สามารถลดมูลค่าได้ 2 วิธี
2021 1) ลดบัญชี Intangible asset โดยตรง
2) ลดมูลค่าผ่าน บช Accumulated Amortization
ในงบแสดงฐานะการเงิน
Customer List 600,000
12-15 * or Accumulated Amortization Less Accumulated amortization 200,000 =400,000 (=>Book Value) LO 2
 Types of Intangible Assets

Artistic-Related Intangible Assets

Examples:
► Plays, literary works, musical works, pictures,
photographs, and video and audiovisual material.

Copyright granted for the life of the creator plus 70 years.

Capitalize costs of acquiring and defending.

Amortized to expense over useful life if less than the legal

life.

and Mickey
Mouse

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 Types of Intangible Assets

Contract-Related Intangible Assets

Examples:
► Franchise and licensing agreements, construction permits,
broadcast rights, and service or supply contracts.

Franchise (or license) with a limited life should be amortized

as operating expense over the life of the franchise.

Franchise with an indefinite life should be carried at cost and

not amortized.

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 Types of Intangible Assets

Technology-Related Intangible Assets

Examples:
► Patented technology and trade secrets granted by a
government body.

Patent gives holder exclusive use for a period of 20 years.

Capitalize costs of purchasing a patent.

Expense all R&D costs and any development costs incurred

before achieving economic viability.

Amortize over legal life or useful life, whichever is shorter.

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กรณี ใช้งานไปเรื่อย ๆ และมีค่าใช้จ่ายเกิดขึ้น ต้องดูว่าเข้าเงื่อนไขที่จะบันทึกเป็นต้นทุนสินทรัพย์หรือไม่ (ดุว่าให้ประโยชน์ทางเศรษฐกิจไหม)
ถ้าเข้าเงือน ต้องรวมเป็นต้นทุนสินทรัพย์และตัดจำหน่ายด้วย เช่น มีคนฟ้องร้องเรื่องลิขลิทธ์ และสุดท้ายชนะ จึงสามาารถใช้ intangible ได้ต่อ
Types of Intangible Assets
ค่าใช้จ่ายที่เกิดขึ้นหลังจากได้ intangible asset นั้นมา
Illustration: Harcott Co. incurs $180,000 in legal costs on January 1,
2019, to successfully defend a patent. The patent’s useful life is 10
years, amortized on a straight-line basis. Harcott records the legal
fees and the amortization at the end of 2019 as follows.

Jan. 1 Patents 180,000

Cash 180,000

Dec. 31 Patent Amortization Expense 18,000

Patents (or Accumulated Amortization) 18,000

Patent Amortization Expense = ($180,000 ÷ 10) = $18,000

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 Types of Intangible LEARNING OBJECTIVE 3

Assets Explain the accounting issues

for recording goodwill.

Goodwill ~ ความสามารถในการทำกำไรที่เกินกว่าระดับปกติ เมื่อเทียบกับกิจการอื่นที่อยู่ในอุตสาหกรรมเดียวกัน

Goodwill ค่าความนิยม กิจการไม่สามารรับรู้ค่าgoodwill ด้วยตนเองได้ เพราะไม่
สามารถวัดมูลค่าที่น่าเชื่อถือเองได้ แต่จะบันทึกโดยกิจการที่มาซื้อกิจการเรา
Conceptually, represents the future economic benefits arising
from the other assets acquired in a business combination that are
not individually identified and separately recognized.

Only recorded when an entire business is purchased.

Goodwill is measured as the ...

excess of cost over the fair value of the identifiable net assets
(assets less liabilities) acquired.

Internally created goodwill should not be capitalized.

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 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 SA. The illustration presents the
statement of financial position of Tractorling SA.

ILLUSTRATION 12.4
Tractorling Statement of Financial Position

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 Recording Goodwill

Illustration: Feng investigates Tractorling’s underlying assets to

determine their fair values. ILLUSTRATION 12.5
Fair Value of Tractorling’s Net Assets

สินทรัพย์

หนี้สิน

Net Asset = Asset - Liabilities

Tractorling Company decides to accept Feng’s offer of $400,000. What
is the value of the goodwill, if any? Feng ยอมจ่าย 400,000 เพื่อได้ net asset 350,000
บาท (ส่วนเกินอาจเป็นเพราะจ่ายเพื่อ 1) Intangible
12-22
asset 2) Goodwill) LO 3
 Recording Goodwill

Illustration: Determination of Goodwill.

ILLUSTRATION 12.6
Determination of Goodwill—
Master Valuation Approach

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 Recording Goodwill
ผู้ซื้อกิจการ (Feng) จะเป็นผู้บันทึก Goodwill ของบริษัทที่ไปซื้อมาเอง
Illustration: Feng records this transaction as follows.
บริษัทบันทึกบัญชี เมื่อซื้อกิจการ
Property, Plant, and Equipment 205,000
Patents 18,000
Inventory 122,000
Accounts Receivables 35,000
Cash ควรจะเป็นสินทรัพย์ไม่มีตัวตน แต่ตามมาตรฐานสินทรัพย์ไม่มีตัวตน ต้องระบุ 25,000
ได้ Goodwill ไม่สามารถระบุได้ด้วยตัวเอง จะถูกบันทึกต้องไปอิงจากการขาย
-
Goodwill 50,000 กิจการ ดังนั้น Goodwill จะไม่ถูกบันทึกภายใต้สินทรัพย์ไม่มีตัวตนในงบการ
เงิน แต่จะแยกออกมาจาก "สินทรัพย์ไม่มีตัวตน" เป็นอีกหัวข้อ
Liabilities 55,000
Cash 400,000

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 Recording Goodwill

Goodwill Write-Off
Goodwill considered to have an indefinite life.

Should not be amortized.

Only adjust carrying value when goodwill is impaired.

Bargain Purchase
Purchase price less than the fair value of net assets
acquired.

Amount is recorded as a gain by the purchaser.

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 หลักการเหมือน PPE เลย
LEARNING OBJECTIVE 4
Impairment of Identify impairment procedures
and presentation requirements
Intangible Assets for intangible assets.

An intangible asset is impaired when a company is not able

to recover the asset’s carrying amount either through using it
or by selling it.
The specific procedures for recording impairments depend
on the type of intangible asset—
1. limited-life or สินทรัพย์ที่การให้ประโยชน์จำกัด (ทำเหมือน PPE เลย) ถ้ามีข้อบ่งชี้ --> Test Impairment
2. indefinite-life (including goodwill). ไม่ต้องตัดจำหน่ายแต่ต้องทดสอบ impairment
**Note: ในเรื่อง PPE & Intangible Asset
Revaluation กับ impairment 2 เรื่องนี้ Concept ไม่เหมือนกัน
- เรื่องการด้อยค่า ทำเมื่อมีข้อบ่งชื้เท่านั้น จึงจะมีการทำ Impairment test
- เรื่องการตีราคาเป็นนโยบายที่เลือกระหว่าง (cost method vs revaluation
12-26 LO 4
method) ต้องทำเพื่อแสดงมูลค่าสินทรัพย์เป็นราคาตลาด
 Impairment of Limited-Life Intangibles

The rules that apply to impairments of property, plant, and

equipment also apply to limited-life intangibles.
The impairment loss is the carrying amount of the asset less
the recoverable amount of the impaired asset.

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 Impairment of Limited-Life Intangibles

Fair value less costs to sell means what the asset could be sold
for after deducting costs of disposal. Value-in-use is the present
value of cash flows expected from the future use and eventual
sale of the asset at the end of its useful life.
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 Impairment of Limited-Life Intangibles
Illustration: Lerch SE has a patent on how to extract oil from shale
rock, with a carrying value of €5,000,000 at the end of 2018.
Unfortunately, several recent non-shale-oil discoveries adversely
affected the demand for shale-oil technology, indicating that the
patent is impaired. Lerch determines the recoverable amount for the
patent, based on value-in-use (because there is no active market for
the patent). Lerch estimates the patent’s value-in-use at €2,000,000,
based on the discounted expected net future cash flows at its market
rate of interest.

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 Impairment of Limited-Life Intangibles

Calculate the impairment loss (based on value-in-use).

€3,000,000 Impairment Loss

€5,000,000 €2,000,000

Unknown €2,000,000

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 Impairment of Limited-Life Intangibles

Calculate the impairment loss (based on value-in-use).

€3,000,000 Impairment Loss

€5,000,000 €2,000,000

Lerch makes the following entry to record the impairment.

Loss on Impairment 3,000,000
Unknown $2,000,000
Allowance for loss on impairment 3,000,000
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 Presentation of Intangible Assets

Statement of Financial Position

Companies should report as a separate item all
intangible assets other than goodwill.

Reporting is similar to the reporting of property, plant,

and equipment.

Contra accounts are not normally shown for

intangibles.

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 Presentation of Intangible Assets

Income Statement
Companies should report

amortization expense and

impairment losses and reversals

for intangible assets other than goodwill separately in net income

(usually in the operating section).

Notes to the financial statements should include the amortization

expense for each type of asset.

12-33 LO 4
 Presentation of Intangible Assets
The reporting of intangible assets is similar to the reporting of
property, plant, and equipment.

ILLUSTRATION 12.12
Nestlé’s Intangible Asset Disclosures Unknown $1,900,000
12-34 LO 4
5
 LEARNING OBJECTIVE 5
Research and Describe the accounting and
presentation for research and
Development Costs development and similar costs.

Research and development (R&D) costs are not in themselves

intangible assets.

Frequently results in the development of patents or copyrights

such as new

product, formula,

process, composition, or

idea, literary work.

ค่าใช้จ่ายที่เกิดขึ้นในขั้นตอนการทำวิจัย (Research) จะบันทึกเป็น ค่าใช้จ่ายประจำงวดไม่ถูกบันทึกเป็นต้นทุน
ของ Intangible asset เพราะ ไม่แน่ใจว่าผลของการวิจัยไม่แน่ใจว่าจะเกิดประโยชน์กบั เราในอนาคต
แต่ค่า Development อาจบันทึกเป็น Expense หรือ Intangible asset ก็ได้ขึ้นกับว่ามันสร้างประโยชน์ใน
12-35 อนาคตให้หรือไหม โดยถ้าเข้าเกณฑ์ 6 ข้อหน้าถัดไป จะบันทึกเป็น Intangible Asset LO 5
 Research and Development Costs

Companies spend considerable sums on research and

development.

ILLUSTRATION 12.13
R&D Outlays, as a Percentage of Sales
12-36 LO 5
 Research and Development Costs

Research costs must be expensed as incurred.

Development costs may or may not be expensed as

incurred.

Capitalization begins when the project is far enough along

in the process such that the economic benefits of the R&D
project will flow to the company (the project is economically
viable).

ค่าใช้จ่ายที่เกิดขึ้นในขั้นตอนการทำวิจัย (Research) จะบันทึกเป็น ค่าใช้จ่ายประจำงวดไม่ถูกบันทึกเป็นต้นทุน

ของ Intangible asset เพราะ ไม่แน่ใจว่าผลของการวิจัยไม่แน่ใจว่าจะเกิดประโยชน์กบั เราในอนาคต
แต่ค่า Development อาจบันทึกเป็น Expense หรือ Intangible asset ก็ได้ขึ้นกับว่ามันสร้างประโยชน์ใน
อนาคตให้หรือไหม โดยถ้าเข้าเกณฑ์ 6 ข้อหน้าถัดไป จะบันทึกเป็น Intangible Asset เช่นรายจ่ายในการ
12-37 พัฒนายา รวมเป็นต้นทุนของสิทธิบัตรยาตัวนั้น LO 5
12-38
 Research and Development Costs

Identifying R & D Activities ILLUSTRATION 12.14

Research Activities versus
Development Activities

Research Activities Examples

Original and planned investigation Laboratory research aimed at discovery of
undertaken with the prospect of gaining new knowledge; searching for applications of
new scientific or technical knowledge new research findings.
and understanding.

Development Activities Examples

Application of research findings or other Conceptual formulation and design of
knowledge to a plan or design for the possible product or process alternatives;
production of new or substantially construction of prototypes and
improved materials, devices, products, operation of pilot plants.
processes, systems, or services before
the start of commercial production or
use.

12-39 LO 5
 Research and Development Costs

Accounting for R & D Activities

Costs Associated with R&D Activities:
Materials, equipment, and facilities.

Personnel.

Purchased intangibles.

Contract Services.

Indirect Costs.

12-40 LO 5
 ต้องอ่าน
Accounting for R & D Activities
Illustration 12.15 Sample R&D Expenditures and Their Accounting
Treatment.

Type of Expenditure Accounting Treatment

1. Construction of long-range research 1. Capitalize and depreciate

facility for use in current and future as R&D expense.
projects (three-story, 400,000-square-
foot building).
2. Acquisition of R&D equipment for use on 2. Expense immediately as
current project only. R&D.
3. Acquisition of machinery for use on 3. Capitalize and depreciate
current and future R&D projects. as R&D expense.

12-41 LO 5
 Accounting for R & D Activities

Type of Expenditure Accounting Treatment

4. Purchase of materials for use on 4. Inventory and allocate to

current and future R&D projects. R&D projects; expense as
consumed.
5. Salaries of research staff designing 5. Expense immediately as
new laser bone scanner. R&D.
6. Research costs incurred under contract 6. Record as a receivable.
with New Horizon, Inc., and billable
monthly.
7. Material, labor, and overhead costs of 7. Expense immediately as
prototype laser scanner (economic R&D.
viability not achieved).

12-42 LO 5
 Accounting for R & D Activities

Type of Expenditure Accounting Treatment

8. Costs of testing prototype and design 8. Expense immediately as

modifications (economic viability not R&D.
achieved).
9. Legal fees to obtain patent on new laser 9. Capitalize as patent and
scanner. amortize to overhead as
part of cost of goods
manufactured.
10. Executive salaries. 10. Expense as operating
expense.
11. Cost of marketing research to promote 11. Expense as operating
new laser scanner. expense.

12-43 LO 5
 Accounting for R & D Activities

Type of Expenditure Accounting Treatment

12. Engineering costs incurred to advance 12. Expense as operating

the laser scanner to full production stage expense. Capitalize as
(economic viability achieved). R&D.
13. Costs of successfully defending patent 13. Capitalize as patent and
on laser scanner. amortize to overhead as
part of cost of goods
manufactured.
14. Commissions to sales staff marketing 14. Expense as operating
new laser scanner. expense.

12-44 LO 5
 Research and Development Costs

Costs Similar to R & D Costs

Start-up costs for a new operation.

Initial operating losses.

Advertising costs.

These costs are expensed as incurred, similar to the

accounting for R&D costs.

12-45 LO 5
 Research and Development Costs
E12.17: Compute the amount to be reported as research and
development expense.
$330,000 / 5 = $66,000
R&D
Cost of equipment acquired that will have Expense
alternative uses in future R&D projects over the next
5 years (uses straight-line depreciation) $330,000 $66,000

Materials consumed in R&D projects 59,000 59,000

Consulting fees paid to outsiders for R&D projects 100,000 100,000

Personnel costs involved in R&D projects 128,000 128,000

Indirect costs reasonably allocable to R&D projects 50,000 50,000

Materials purchased for future R&D projects 34,000 0

$403,000

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 Presentation of R&D Costs

Companies should disclose the total R&D costs charged to

expense each period.

ILLUSTRATION 12.16
R&D Reporting

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 COPYRIGHT

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12-48