Intangible Assets

Intangible Assets

Intangible assets are non-physical but identifiable asset which are expected to provide economic benefits to the business over its useful life.

Examples of intangible assets are:

  • Trademarks
  • Trade Licenses
  • Software License
  • Patents
  • Computer software
  • Trade secrets (such as secret formula or recipe)
  • Rights (such as drilling rights or water rights)

An amortization adjustment is recorded each year to spread the cost of intangible asset over its useful life. Accounting entry for amortization would be:

Description

Debit

Credit

Amortization

****

 

             Accumulated Amortization

 

****

For reporting purposes, Intangible assets are stated in balance sheet at cost less accumulated amortization and/or any identified impairment loss.

Cost of intangible asset*******
Less: Accumulated amortization(*****)
Less: Provision for impairment (if any)(****)
 ******

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