Intangible Assets Flashcards
Costs to maintain goodwill
They are expensed; not added to the goodwill value
What level do you test goodwill at
At the operating level(reporting unit) or one level below that
Qualitative factors for testing impairment
- Economic conditions: deterioration of economy
- Industry & Market conditions: decline in industry & increase in costs associated with it
- Firm specific conditions: decline in cash flow, change in management, loss of important people, bankruptcy, etc.
Impairment Loss J/E
Dr. Impairment Loss
Cr. Goodwill
R&D costs for current projects vs current & future projects
Current projects are expensed to R&D while current & future projects are depreciated over their estimated future lives and the depreciation goes to R&D over time
R&D research performed by other companies for you
When a company performs R&D for you, you expense it and the shit you do for other people don’t count
How are software costs for internal use depreciated
Straight line method
How software costs to be sold are depreciated
- Revenue Method: Current year software costs multiplied by {Current year revenue divided by (Current year revenue + Estimated future revenue)} - really just use the percentage of revenue
- or straight line; which ever is greater