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.
4. Identify impairment procedures and presentation requirements for intangible assets.
5. Describe the accounting and presentation for research and development and similar costs.
Acquisition and Disposition of Property, Plant, and Equipmentreskino1
Identify property, plant, and equipment and its related costs.
Discuss the accounting problems associated with interest capitalization.
Explain accounting issues related to acquiring and valuing plant assets.
Describe the accounting treatment for costs subsequent to acquisition.
Describe the accounting treatment for the disposal of property, plant, and equipment.
Valuation of Inventories: A Cost-Basis Approachreskino1
Describe inventory classifications and different inventory systems.
Identify the goods and costs included in inventory.
Compare the cost flow assumptions used to account for inventories.
Determine the effects of inventory errors on the financial statements.
Current Liabilities, Provisions, and Contingenciesreskino1
Current Liabilities,
Provisions, and Contingencies
After studying this chapter, you should be able to:
1. Describe the nature, valuation, and reporting of current liabilities.
2. Explain the accounting for different types of provisions.
3. Explain the accounting for loss and gain contingencies.
4. Indicate how to present and analyze liability-related information
A presentation on Property, Plant & Equipment (PPE)-IAS 16, Prepared by a few students of Dept. of Accounting & Info. Systems, Jahangirnagar University, Savar, Dhaka
Acquisition and Disposition of Property, Plant, and Equipmentreskino1
Identify property, plant, and equipment and its related costs.
Discuss the accounting problems associated with interest capitalization.
Explain accounting issues related to acquiring and valuing plant assets.
Describe the accounting treatment for costs subsequent to acquisition.
Describe the accounting treatment for the disposal of property, plant, and equipment.
Valuation of Inventories: A Cost-Basis Approachreskino1
Describe inventory classifications and different inventory systems.
Identify the goods and costs included in inventory.
Compare the cost flow assumptions used to account for inventories.
Determine the effects of inventory errors on the financial statements.
Current Liabilities, Provisions, and Contingenciesreskino1
Current Liabilities,
Provisions, and Contingencies
After studying this chapter, you should be able to:
1. Describe the nature, valuation, and reporting of current liabilities.
2. Explain the accounting for different types of provisions.
3. Explain the accounting for loss and gain contingencies.
4. Indicate how to present and analyze liability-related information
A presentation on Property, Plant & Equipment (PPE)-IAS 16, Prepared by a few students of Dept. of Accounting & Info. Systems, Jahangirnagar University, Savar, Dhaka
Assurance and advisory firm Nkonki will be hosting a roundtable session exclusively for CFOs with Darrel Scott, Board Member of the IFRS Foundation. Scott, who is in Johannesburg for the occasion, will provide global and industry insights on the newly-released IFRS 16, issued on 13 January 2016, to CFOs from many of South Africa’s leading companies.
“The session is designed to share insights and deliberate on how this new accounting standard will impact processes and financial reporting, and how industries across the globe will deal with this change,” says Sindi Zilwa, CEO of Nkonki. It will also provide an update on accounting developments in the medium term.
The International Accounting Standards Board (IASB) issued IFRS 16 Leases in January 2016. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, namely, the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 is effective from 1 January 2019. IFRS 16 completes the IASB’s project to improve the financial reporting of leases. IFRS 16 replaces the previous leases Standard, IAS 17 Leases, and related Interpretations.
Describe depreciation concepts and methods of depreciation.
Identify other depreciation issues.
Explain the accounting issues related to asset impairment.
Discuss the accounting procedures for depletion of mineral resources.
Apply the accounting for revaluations.
Demonstrate how to report and analyze property, plant, equipment, and mineral resources.
Describe and apply the lower-of-cost-or-net realizable value rule.
Identify other inventory valuation issues.
Determine ending inventory by applying the gross profit method.
Determine ending inventory by applying the retail inventory method.
Explain how to report and analyze inventory.
Assurance and advisory firm Nkonki will be hosting a roundtable session exclusively for CFOs with Darrel Scott, Board Member of the IFRS Foundation. Scott, who is in Johannesburg for the occasion, will provide global and industry insights on the newly-released IFRS 16, issued on 13 January 2016, to CFOs from many of South Africa’s leading companies.
“The session is designed to share insights and deliberate on how this new accounting standard will impact processes and financial reporting, and how industries across the globe will deal with this change,” says Sindi Zilwa, CEO of Nkonki. It will also provide an update on accounting developments in the medium term.
The International Accounting Standards Board (IASB) issued IFRS 16 Leases in January 2016. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, namely, the customer (‘lessee’) and the supplier (‘lessor’). IFRS 16 is effective from 1 January 2019. IFRS 16 completes the IASB’s project to improve the financial reporting of leases. IFRS 16 replaces the previous leases Standard, IAS 17 Leases, and related Interpretations.
Describe depreciation concepts and methods of depreciation.
Identify other depreciation issues.
Explain the accounting issues related to asset impairment.
Discuss the accounting procedures for depletion of mineral resources.
Apply the accounting for revaluations.
Demonstrate how to report and analyze property, plant, equipment, and mineral resources.
Describe and apply the lower-of-cost-or-net realizable value rule.
Identify other inventory valuation issues.
Determine ending inventory by applying the gross profit method.
Determine ending inventory by applying the retail inventory method.
Explain how to report and analyze inventory.
12-‹#›1Describe the characteristics, valuation, and amo.docxdrennanmicah
12-‹#›
1Describe the characteristics, valuation, and amortization of intangible assets.
2Describe the accounting for various types of intangible assets.
3Explain the accounting issues for recording goodwill.
LEARNING OBJECTIVES
4Explain impairment procedures and presentation requirements for intangible assets.
5Describe accounting and presentation for research and development and similar costs.
After studying this chapter, you should be able to:
Intangible Assets
12
12-‹#›
PREVIEW OF CHAPTER 12
Intermediate Accounting
16th Edition
Kieso ● Weygandt ● Warfield
12-‹#›
LO 1 Describe the characteristics, valuation, and amortization of intangible assets.
Characteristics
Lack physical existence.
Not financial instruments.
Normally classified as long-term asset.
Common types of intangibles:
Patents
Copyrights
Franchises or licenses
Trademarks or trade names
Goodwill
INTANGIBLE ASSET ISSUES
The Coca-Cola Company’s success comes from its secret formula for making Coca-Cola, not
its plant facilities.
12-‹#›
Purchased Intangibles
Recorded at cost.
Includes all costs necessary to make the intangible asset ready for its intended use.
Typical costs include:
Purchase price.
Legal fees.
Other incidental expenses.
Valuation
INTANGIBLE ASSET ISSUES
LO 1
12-‹#›
Valuation
Google expensed the R&D costs incurred to develop its valuable search engine.
INTANGIBLE ASSET ISSUES
Internally Created Intangibles
Recorded at cost.
Generally expensed.
Only capitalize direct costs incurred in developing the intangible, such as legal costs.
LO 1
12-‹#›
Amortization of Intangibles
Limited-Life Intangibles
Amortize to expense over useful life.
Credit asset account or accumulated amortization.
Useful life should reflect the periods over which the asset will contribute to cash flows.
Amortization should be cost less residual value.
Companies should evaluate the limited-life intangibles for impairment.
INTANGIBLE ASSET ISSUES
LO 1
12-‹#›
Indefinite-Life Intangibles
No foreseeable limit on time the asset is expected to provide cash flows.
Must test indefinite-life intangibles for impairment at least annually.
No amortization.
INTANGIBLE ASSET ISSUES
Amortization of Intangibles
LO 1
12-‹#›
ILLUSTRATION 12-1
Accounting Treatment for Intangibles
INTANGIBLE ASSET ISSUES
Amortization of Intangibles
LO 1
12-‹#›
Does it matter how a company builds brand value? In a word, yes. If the brand is internally developed, its value does not appear in the financial statements. This is the case for The Coca-Cola Company, whose brand value is estimated to be roughly worth $79.2 billion but its balance sheet values its “trademarks within definite-lives” (i.e., brands) at just $6.7 billion. As you are learning in this chapter, this reporting results because the accounting rules prohibit companies from recognizing brands and many other “intangible” assets if they created them themselves. In contrast, when Procter & Gamble (P&G) acquired Gillette in 20.
AiDLo management program important question bank series-4DistPub India
AiDLo Team has prepared question answer bank from different distance learning program and you can search answer from entire our aidlo.com portal. So visit our website for membership.
1. Discuss the strategic actions Dunlap took to turn Sunbeam aroun.docxSONU61709
1. Discuss the strategic actions Dunlap took to turn Sunbeam around, whether they were the appropriate actions, and what they resulted in.
2. Boards have a fiduciary duty to look after shareholder interests. With that in mind, please comment on the board of directors at Sunbeam – did they do a good job of looking after their shareholders?
3. Describe the first compensation package offered to Dunlap. Was it well-designed? What type of behavior(s) did it motivate?
All answers are opinion based and related to strategic management concepts. Outside research is acceptable but no Wikipedia. 4 pages.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________
FORM 10-K
(Mark One)
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2016
or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ____________________ to ____________________
Commission file number 1-6368
Ford Motor Credit Company LLC
(Exact name of registrant as specified in its charter)
Delaware 38-1612444
(State of organization) (I.R.S. employer identification no.)
One American Road, Dearborn, Michigan 48126
(Address of principal executive offices) (Zip code)
(313) 322-3000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each Exchange on which registered
4.050% Notes due December 10, 2018 New York Stock Exchange
3.700% Notes due March 11, 2019 New York Stock Exchange
3.588% Notes due June 2, 2020 New York Stock Exchange
3.350% Notes Due Nine Months or More from the Date
of Issue due August 20, 2026 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229. ...
Da tobUr JrL+-, )^ tlCeLDogBankruptcy, Reorganization, an.docxsimonithomas47935
Da ?tobUr'\ JrL+-, )^ tlCeLDog
Bankruptcy, Reorganization, anti Liquidation
b. After distribution to general crefitors and subordination adjustments are made, how
much of the proceeds are received by the second-mortgage holders? By holders of
the notes payable? By the subordinated debentures? By the common stockholders?
Chapter 24
Subordinated debentures
Total debt
Common equity
Total assets
The trustee's costs total $281,250, and the firm has no accrued taxes or wages. The
debentures are subordinated only to the notes payable. If the firm goes bankrupt and
liquidates, how much will each class of investors receive if a total of $2.5 million is
received from sale ofthe assets?
The Verbrugge Publishing Company's 2012 balance sheet and statement are as
Reorganization follows (in miliions of dollars):
ce Sheet
Current
Intermediate
Problenr 2
Southwestern Wear Inc. has the following balance sheet:
Current assets
Fixed assets
Net fixed
Goodwill
$1,875,000 Accounts payabie
1,875,000 Notes payable
&,759,gqq Total liabilities and equity
$ 37s,000
750,000
750,000
$1,875,000
1,875,000
$ulgqqq
$+z
78
6
135
9
9
$168
153
15
Current
Advance
stock, $112.50 par value
,200,000 shares)
$10.50 preferred stoch no par, callable
at $150 (60,000 shares)
Common stoch $1.50 par value
shares)
Ret earnings
Total assets Total
Income S
Net
expense
operating income
income
EBT
Taxes (50%)
Net income
Dividends on $6 preferred
Dividends on $10.50 preferred
Income available to common stockholders
57
$33€$336
$540.0
516.0
$ 24.0
3.0
$ 27.0
13.5
$ l3.s
7.2
0.6
$_s3
a
Chapter
Wn 2)-l ? )2'2,- t',
&o k903t22 Mergers and Corporate Control
(sr-1)
Valuation
Red Valley is considering an acquisition of Flagg Markets' Fiagg currently has a cost
of equity of 10%; of its financing is in the form of and the rest is in common
equity. Its federal-plus: tax rate is 407o. uisition, Red Vailey expects Flagg to
have the following FCFs the next 3 years (in millions):
Year 2 Year 3
$10.00 $20.00 $2s.00
24.00 20.28
Year 1
exPense
After the free cash flows are expected to at a constant rate of 5D/a, and the capital
will stabilize at 35o/o debt with an rate of 7o/o.
'u. Wtrut is Flagg's unlevered cost of equity? What its levered cost of equity and cost of
capital for the post-horizon period?
b. Uiing the adjusted present value approach, what is Flagg's value of operations to Red Valley?
Easy Problem 1
,,R
Intermediate
' Problems 2-3
,"rr*,rrl,
The fotlowing infonnation is required to work Problems 22-1 through
22-4'
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1
million shares outstanding and a target capitai structure consisting csf 30o/o debt. Yandell's
debt interest rate is 8%. Assume that the risk-free rate of interest is 5% and the market risk
premium is 6%. Both Vandell and Hastings face a 40oio tax rate.
Vandell's free cash flotv (FCFo) is $2 million per year and is expected .
Commercial Real Estate Investment & Development Firm seeking initial funding.
To obtain Executive Summary please email rodneylholland@gmail.com for a confidentiality agreement.
Accounting for Pensions and Postretirement Benefitsreskino1
After studying this chapter, you should be able to:
Discuss the fundamentals of pension plan accounting.
Use a worksheet for employer’s pension plan entries.
Explain the accounting for past service costs.
Explain the accounting for remeasurements.
Describe the requirements for reporting pension plans in financial statements.
Explain the accounting for other postretirement benefits.
This study aims to examine the tendency of fraud to the perception of
external auditors triggered by the five components of pentagon fraud:
pressure, opportunity, arrogance, rationalization,and competence. In
addition, the morality of the individual is placed as an intervention
variable for this relationship. This is a quantitative study with a survey
of external auditors at the BPK in Jakarta. The intervention model for
the research framework was developed to investigate the role of
individual morality interference. The findings suggest that the five
components of the pentagon's fraud theory are not fully proven to be
fraud triggers in the perception of external auditors. Arrogance,
rationalization, and competence have proven to have a positive effect
on the perception of fraud tendencies, while pressure and opportunity
have a negative impact on the perception of fraud tendencies. Then
pressure, rationalization, and competence are shown to negatively
impact individual morality, while opportunity and arrogance positively
impact individual morality. In addition, 5 (five) variables in fraud
pentagon theory, namely pressure, opportunity, arrogance,
rationalization, and competence, are proven to prevent the perception of
fraud tendency. This can be explained because this study is the first
study to examine pentagon fraud in the context of behavior in the
environment of government external auditors, so the results cannot be
compared with previous studies that used proxies in financial
statements as predictors of fraud.
Accounting and the Time Value of Money
After studying this chapter, you should be able to:
Describe the fundamental concepts related to the time value of money.
Solve future and present value of 1 problems.
Solve future value of ordinary and annuity due problems.
Solve present value of ordinary and annuity due problems.
Solve present value problems related to deferred annuities, bonds, and expected cash flows.
Statement of Financial Position and Statement of Cash Flowsreskino1
Statement of Financial Position and Statement of Cash Flows
After studying this chapter, you should be able to:
Explain the uses, limitations, and content of the statement of financial position.
Prepare a classified statement of financial position.
Explain the purpose, content, and preparation of the statement of cash flows.
Describe additional types of information provided.
Income Statement and Related Information
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
Identify the uses and limitations of an income statement.
Describe the content and format of the income statement.
Discuss how to report various income items.
Explain the reporting of accounting changes and errors.
Describe related equity statements.
The Accounting Information System
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
Describe the basic accounting information system.
Record and summarize basic transactions.
Identify and prepare adjusting entries.
Prepare financial statements from the adjusted trial balance and prepare closing entries.
Prepare financial statements for a merchandising company.
Conceptual Framework for Financial Reportingreskino1
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
Describe the usefulness of a conceptual framework and the objective of financial reporting.
Identify the qualitative characteristics of accounting information and the basic elements of financial statements.
Review the basic assumptions of accounting.
Explain the application of the basic principles of accounting.
Intermediate Accounting Chapter 1 about Financial Reporting
and Accounting Standards
After studying this chapter, you should be able to:
Describe the growing importance of global financial markets and its relation to financial reporting.
Explain the objective of financial reporting.
Identify the major policy-setting bodies and their role in the standard-setting process.
Discuss the challenges facing financial reporting.
PERAN PEMODERASI KUALITAS AUDIT ATAS PENGARUH PERENCANAAN PAJAK DAN PAJAK TAN...reskino1
The purpose of this study is to examine the impact of tax planning and deferred tax assets on earnings management in manufacturing companies listed on the Indonesia Stock Exchange from 2016 to 2018.
Pengaruh Organizational Justice Dan Religiosity Terhadap Employee Fraud Denga...reskino1
This study aims to examine the influence of organizational justice and religiosity on employee fraud mediated by whistleblowing intention. This study uses primary data by distributing questionnaires to employees who work in Islamic banks in the DKI Jakarta area. Sampling was done using the purposive sampling method. This study used sample of 71 respondents. The data analysis method that used as Partial Least Square (PLS)-SEM with the help of data analysis tool SmartPLS 3.0. The results of this study indicate that religiosity shows significant effect on whistleblowing intentions. Organizational justice unable to contribute significantly to whistleblowing intention. Whistleblowing intention have a significant effect on employee fraud. Organizational justice and religiosity unable to contribute significantly to the employee fraud. Furthermore, religiosity significantly influence on employee fraud through whistleblowing intentions. Organizational justice unable to contribute significantly to employee fraud through whistleblowing intentions.
STUDY OF FRAUD TENDENCY: THE ROLE OF UNETHICAL BEHAVIORS AS MEDIATIONreskino1
Islamic banking and Islamic insurance are institutions that are trusted by the public that play an important role in the economy that should uphold Islamic values. But in fact, there are still many cases of fraud that occur in Islamic banking and Islamic insurance. This study aims to examine the determinant factor fraud tendency with the role of unethical behavior as mediation. The sample used is the financial staff of Islamic banking and Islamic insurance in DKI Jakarta as many as 118 respondents. The data analysis method used in this research is Partial Least Square (PLS-SEM). The results of this study indicate that the implementation of good corporate governance (GCG) practice has a significant effect on unethical behavior, but conformity compensation does not have a significant effect on unethical behavior. Conformity compensation, implementation of GCG practice, and unethical behavior has a significant effect on the fraud tendency. Furthermore, the implementation of GCG practice has a significant effect on fraud tendency through unethical behavior, but conformity compensation has no significant effect on fraud tendency through unethical behavior.
MODEL PENDETEKSIAN KECURANGAN LAPORAN KEUANGAN DENGAN ANALISIS FRAUD TRIANGLEreskino1
The research purposes is to create a model to detect financial statement fraud. This research examines the variable of fraud triangle and auditor industry specialization with financial statement fraud.
Samples were 30 companies of fraud and 30 non-fraud companies that
were listed on the Indonesia Stock Exchange (IDX) and sanctioned by the Financial Services Authority (FSA). The result shows the financial targets can be detect financial statement fraud, while financial stability can’t be detect financial statement fraud.
ISLAMIC WORK ETHICS AND ORGANIZATIONAL JUSTICE IMPLEMENTATION IN REACHING ACC...reskino1
The topic of business ethics from Islamic perspective has become important for business currently. This paper investigates the influence of Islamic work ethics on organizational justice and its impact on accountants’ job satisfaction. A total of 202 accountants participated in this study from the Islamic finance industry in Indonesia. The analysis uses the AMOS 21 program as a tool to solve structural equation modeling problems. The results show that Islamic work ethics positively influence the two dimensions of organizational justice, which are procedural and interactive justice, but not on distributive justice. Moreover, all dimensions of organizational justice and Islamic work ethics were found to positively influence job satisfaction.
How to Make a Field invisible in Odoo 17Celine George
It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
Honest Reviews of Tim Han LMA Course Program.pptxtimhan337
Personal development courses are widely available today, with each one promising life-changing outcomes. Tim Han’s Life Mastery Achievers (LMA) Course has drawn a lot of interest. In addition to offering my frank assessment of Success Insider’s LMA Course, this piece examines the course’s effects via a variety of Tim Han LMA course reviews and Success Insider comments.
2. 12-2
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.
LEARNING OBJECTIVES
4. Identify impairment
procedures and presentation
requirements for intangible
assets.
5. Describe the accounting and
presentation for research and
development and similar
costs.
After studying this chapter, you should be able to:
Intangible Assets
CHAPTER 12
4. 12-4
Characteristics
Identifiable.
Lack physical existence.
Not monetary assets.
Normally classified as non-current asset.
Common types of intangibles:
Intangible Asset Issues
Christian Dior’s
(FRA) most
important asset is its
brand image, not its
store fixtures.
LEARNING OBJECTIVE 1
Discuss the characteristics,
valuation, and amortization of
intangible assets.
1. Marketing-related.
2. Customer-related.
3. Artistic-related.
4. Contract-related.
5. Technology-related.
6. Goodwill.
LO 1
5. 12-5 LO 1
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.
► Other incidental expenses.
Valuation
Intangible Asset Issues
6. 12-6
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.
LO 1
Valuation
8. 12-8
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.
LO 1
Intangible Asset Issues
9. 12-9
Amortization of Intangibles
LO 1
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.
Intangible Asset Issues
11. 12-11
Six Major Categories:
1. Marketing-related.
2. Customer-related.
3. Artistic-related.
4. Contract-related.
5. Technology-related.
6. Goodwill.
Types of Intangible
Assets
LEARNING OBJECTIVE 2
Describe the accounting for
various types of intangible
assets.
LO 2
12. 12-12
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.
Types of Intangible Assets
LO 2
13. 12-13
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
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).
What Do The Numbers Mean? Keep Your Hands Off My Intangible!
LO 2
14. 12-14
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.
LO 2
Types of Intangible Assets
15. 12-15
Illustration: Green Market AG acquires the customer list of a large
newspaper for €6,000,000 on January 1, 2019. Green Market expects
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.
Customer List 6,000,000
Jan. 1
2019
Cash 6,000,000
Amortization Expense 2,000,000
Dec. 31
2019
2020
2021
Customer List * 2,000,000
* or Accumulated Amortization LO 2
Types of Intangible Assets
16. 12-16
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.
Mickey
Mouse
and
LO 2
Types of Intangible Assets
17. 12-17
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.
LO 2
Types of Intangible Assets
18. 12-18
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.
LO 2
Types of Intangible Assets
19. 12-19
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.
Patents 180,000
Jan. 1
Cash 180,000
Patent Amortization Expense 18,000
Dec. 31
Patents (or Accumulated Amortization) 18,000
LO 2
Patent Amortization Expense = ($180,000 ÷ 10) = $18,000
Types of Intangible Assets
20. 12-20 LO 3
Goodwill
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.
Types of Intangible
Assets
LEARNING OBJECTIVE 3
Explain the accounting issues
for recording goodwill.
21. 12-21
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.
Recording Goodwill
LO 3
ILLUSTRATION 12.4
Tractorling Statement of Financial Position
22. 12-22
Illustration: Feng investigates Tractorling’s underlying assets to
determine their fair values.
Tractorling Company decides to accept Feng’s offer of $400,000. What
is the value of the goodwill, if any?
LO 3
ILLUSTRATION 12.5
Fair Value of Tractorling’s Net Assets
Recording Goodwill
24. 12-24
Property, Plant, and Equipment 205,000
Patents 18,000
Inventory 122,000
Accounts Receivables 35,000
Cash 25,000
Goodwill 50,000
Liabilities 55,000
Cash 400,000
Illustration: Feng records this transaction as follows.
LO 3
Recording Goodwill
25. 12-25
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.
LO 3
Recording Goodwill
26. 12-26
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
2. indefinite-life (including goodwill).
Impairment of
Intangible Assets
LO 4
LEARNING OBJECTIVE 4
Identify impairment procedures
and presentation requirements
for intangible assets.
27. 12-27
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.
Impairment of Limited-Life Intangibles
LO 4
28. 12-28
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.
LO 4
Impairment of Limited-Life Intangibles
29. 12-29
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.
LO 4
Impairment of Limited-Life Intangibles
31. 12-31
€5,000,000 €2,000,000
Unknown $2,000,000
€3,000,000 Impairment Loss
Calculate the impairment loss (based on value-in-use).
LO 4
Loss on Impairment 3,000,000
Patents 3,000,000
Lerch makes the following entry to record the impairment.
Impairment of Limited-Life Intangibles
32. 12-32
Illustration: The carrying value of the patent after impairment is
€2,000,000. Lerch’s amortization is €400,000 (€2000,000 ÷ 5) over
the remaining five years of the patent’s life. The amortization
expense and carrying amount after the impairment is shown below:
Reversal of Impairment Loss
ILLUSTRATION 12.8
Post-Impairment Carrying Value of Patent
LO 4
Impairment of Limited-Life Intangibles
33. 12-33
Early in 2020, based on improving conditions in the market for
shale-oil technology, Lerch remeasures the recoverable amount of
the patent to be €1,750,000. In this case, Lerch reverses a portion
of the recognized impairment loss.
Reversal of Impairment Loss
Patents (€1,750,000 - €1,600,000) 150,000
Recovery of Impairment Loss 150,000
LO 4
Impairment of Limited-Life Intangibles
34. 12-34
Impairment of Indefinite-Life Intangibles Other
than Goodwill
Should be tested for impairment at least annually.
Impairment test is the same as that for limited-life
intangibles. That is,
► compare the recoverable amount of the intangible
asset with the asset’s carrying value.
► If the recoverable amount is less than the carrying
amount, the company recognizes an impairment.
LO 4
Impairment of Intangible Assets
35. 12-35
Illustration: Arcon Radio purchased a broadcast license for
€2,000,000. The license is renewable every 10 years. Arcon Radio
has renewed the license with the GCC twice, at a minimal cost.
Because it expects cash flows to last indefinitely, Arcon reports the
license as an indefinite-life intangible asset. Recently, the GCC
decided to auction these licenses to the highest bidder instead of
renewing them. Based on recent auctions of similar licenses, Arcon
Radio estimates the fair value less costs to sell (the recoverable
amount) of its license to be €1,500,000.
Impairment of Indefinite-Life Intangibles
LO 4
ILLUSTRATION 12.9
Computation of Loss on Impairment of Broadcast License
36. 12-36
Impairment of Goodwill
Companies must test goodwill at least annually.
Impairment test is conducted based on the cash-generating
unit to which the goodwill is assigned.
► Cash-generating unit = smallest identifiable group of assets
that generate cash flow.
Estimation of the recoverable amount for goodwill impairments
is usually based on value-in-use estimates.
Goodwill impairment loss reversals are not permitted.
LO 4
Impairment of Intangible Assets
37. 12-37
Illustration: Kohlbuy AG has three divisions. It purchased one
division, Pritt Products, four years ago for €2 million. Unfortunately,
Pritt experienced operating losses over the last three quarters.
Kohlbuy management is now reviewing the division (the cash-
generating unit), for purposes of its annual impairment testing.
Illustration 12.10 lists the Pritt Division’s net assets, including the
associated goodwill of €900,000 from the purchase.
ILLUSTRATION 12.10
Impairment of Goodwill
LO 4
40. 12-40
Unknown $1,900,000
€2,400,000 €1,900,000
LO 5
€500,000 Impairment Loss
Loss on Impairment 500,000
Goodwill 500,000
LO 4
Kohlbuy makes the following entry to record the impairment.
Assume that the recoverable amount for the Pritt Division is
€1,900,000 instead of €2,800,000.
Impairment of Goodwill
41. 12-41
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.
LO 4
Presentation of Intangible Assets
42. 12-42
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.
LO 4
Presentation of Intangible Assets
43. 12-43
Unknown $1,900,000
LO 5
LO 4
The reporting of intangible assets is similar to the reporting of
property, plant, and equipment.
Presentation of Intangible Assets
ILLUSTRATION 12.12
Nestlé’s Intangible Asset Disclosures
44. 12-44
Frequently results in the development of patents or copyrights
such as new
product,
process,
idea,
formula,
composition, or
literary work.
Research and development (R&D) costs are not in themselves
intangible assets.
LO 5
Research and
Development Costs
LEARNING OBJECTIVE 5
Describe the accounting and
presentation for research and
development and similar costs.
45. 12-45
Companies spend considerable sums on research and
development.
LO 5
ILLUSTRATION 12.13
R&D Outlays, as a Percentage of Sales
Research and Development Costs
46. 12-46
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).
LO 5
Research and Development Costs
47. 12-47
Identifying R & D Activities
Research Activities
Original and planned investigation
undertaken with the prospect of gaining
new scientific or technical knowledge
and understanding.
Examples
Laboratory research aimed at discovery of
new knowledge; searching for applications of
new research findings.
Development Activities
Application of research findings or other
knowledge to a plan or design for the
production of new or substantially
improved materials, devices, products,
processes, systems, or services before
the start of commercial production or
use.
Examples
Conceptual formulation and design of possible
product or process alternatives; construction
of prototypes and
operation of pilot plants.
LO 5
ILLUSTRATION 12.14
Research Activities versus
Development Activities
Research and Development Costs
48. 12-48
Accounting for R & D Activities
Costs Associated with R&D Activities:
Materials, equipment, and facilities.
Personnel.
Purchased intangibles.
Contract Services.
Indirect Costs.
LO 5
Research and Development Costs
49. 12-49
1. Construction of long-range research
facility for use in current and future
projects (three-story, 400,000-square-
foot building).
2. Acquisition of R&D equipment for use on
current project only.
3. Acquisition of machinery for use on
current and future R&D projects.
Type of Expenditure Accounting Treatment
Illustration 12.15 Sample R&D Expenditures and Their Accounting
Treatment.
1. Capitalize and depreciate
as R&D expense.
2. Expense immediately as
R&D.
3. Capitalize and depreciate
as R&D expense.
LO 5
Accounting for R & D Activities
50. 12-50
4. Purchase of materials for use on
current and future R&D projects.
5. Salaries of research staff designing
new laser bone scanner.
6. Research costs incurred under contract
with New Horizon, Inc., and billable
monthly.
7. Material, labor, and overhead costs of
prototype laser scanner (economic
viability not achieved).
4. Inventory and allocate to
R&D projects; expense as
consumed.
5. Expense immediately as
R&D.
6. Record as a receivable.
7. Expense immediately as
R&D.
Type of Expenditure Accounting Treatment
LO 5
Accounting for R & D Activities
51. 12-51
8. Costs of testing prototype and design
modifications (economic viability not
achieved).
9. Legal fees to obtain patent on new laser
scanner.
10. Executive salaries.
11. Cost of marketing research to promote
new laser scanner.
8. Expense immediately as
R&D.
9. Capitalize as patent and
amortize to overhead as
part of cost of goods
manufactured.
10. Expense as operating
expense.
11. Expense as operating
expense.
Type of Expenditure Accounting Treatment
LO 5
Accounting for R & D Activities
52. 12-52
12. Engineering costs incurred to advance
the laser scanner to full production stage
(economic viability achieved).
13. Costs of successfully defending patent
on laser scanner.
14. Commissions to sales staff marketing
new laser scanner.
12. Expense as operating
expense. Capitalize as
R&D.
13. Capitalize as patent and
amortize to overhead as
part of cost of goods
manufactured.
14. Expense as operating
expense.
Type of Expenditure Accounting Treatment
LO 5
Accounting for R & D Activities
53. 12-53
Costs Similar to R & D Costs
Start-up costs for a new operation.
Initial operating losses.
Advertising costs.
LO 5
These costs are expensed as incurred, similar to the
accounting for R&D costs.
Research and Development Costs
54. 12-54
$66,000
59,000
100,000
128,000
50,000
0
R&D
Expense
$403,000
$330,000 / 5 = $66,000
E12.17: Compute the amount to be reported as research and
development expense.
LO 5
Research and Development Costs
Cost of equipment acquired that will have alternative
uses in future R&D projects over the next 5 years
(uses straight-line depreciation)
Materials consumed in R&D projects
Consulting fees paid to outsiders for R&D projects
Personnel costs involved in R&D projects
Indirect costs reasonably allocable to R&D projects
Materials purchased for future R&D projects
$330,000
59,000
100,000
128,000
50,000
34,000
55. 12-55
Presentation of R&D Costs
LO 5
Companies should disclose the total R&D costs charged to
expense each period.
ILLUSTRATION 12.16
R&D Reporting