Ch 11 Intangible Assets Flashcards
the purchaser in a business combination pays less than the fair value of the identifiable net assets
bargain purchase
transaction in which the purchaser obtains control of one or more businesses
business combination
a federally granted right that all authors, painters, musicians, sculptors, and other artists have in their creations and expressions
copyright
translation of research findings or other knowledge into a plan or design for a new product or process, or for a significant improvement to an existing product or process whether intended for sale or use
development activities
if the intangible asset is impaired, the impairment amount is calculated as follows
carrying value of intangible asset - fair value of intangible asset = impairment loss
fair value test
a contractual arrangement under which the franchisor grants the franchisee the right to sell certain products or services, to use certain trademarks or trade names, or to perform certain functions, usually within a designated geographical area
franchise
__________ is measured as the excess of the cost of the purchase over the fair value of the identifiable net assets (assets less liabilities) purchased
goodwill
the write-off of all or part of they carrying value of property, plant, and equipment
impairment
If no factors (legal, regulatory, contractual, competitive, or other) limit the useful life of an intangible asset, a company considers its useful life _______. An ______ life means that there is no foreseeable limit on the period of time over which the intangible asset is expected to provide cash flows.
indefinite-life intangibles
contain 2 characteristics:
1. lack physical existence
2. not financial instruments
intangible assets
operating rights are referred to as …
license (permit)
a category of an intangible asset; assets that may expire at some point
the cost of _________ is amortized to expense over its useful life
the useful life should reflect the periods over which the asset will contribute to cash flows
limited-life (finite) intangibles
a procedure of valuation
it assumes goodwill covers all the values that cannot be specifically identified with any identifiable tangible or intangible asset
master valuation approach
start-up costs include _____, such as legal and state fees incurred to organize a new business entity
organizational costs
a __________ gives the holder exclusive right to use, manufacture, and sell a product or process for a period of 20 years without interference or infringement by others
patent
the company estimates the future cash flows (undiscounted) expected from the use of the asset and its eventual disposal, then makes the following comparison and conclusions
if the sum of expected future cash flows is greater than the carrying value of the intangible asset, there is no impairment
if the sum of expected future cash flows is less than they carrying value of the intangible asset, there is an impairment loss
recoverability test
planned search or critical investigation aimed at discovery of new knowledge
research activities
________ are not in themselves intangible assets
________ activities frequently result in the development of patents or copyrights (such as a new product, process, idea, formula, composition, or literary work) that may provide future value
research and development costs
_________ are incurred for one-time activities to start a new operation
start-up costs
a word, phrase, or symbol that distinguishes or identifies a particular company or product
trademark, trade name
