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What are potential causes of impairment?

There are a number of reasons as to why an intangible asset could be impaired, but common examples include legal restrictions, business restructurings, development of new technology (internally or by competitors), as well as economic changes that are external to the company.

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    Intangibles are considered long-lived assets that are not physical in nature or lack physical substance but are used throughout the ordinary course of business activities. Intangible assets are either identifiable intangible assets or unidentifiable. The only unidentifiable intangible asset that you will need to know is goodwill. Some examples of both identifiable and unidentifiable intangible […]

  • What does it mean to amortize an intangible asset?

    Amortization of intangible assets is the same thing as depreciating physical (tangible) assets. If the company has finite life, then the company would amortize the intangible asset over the estimated useful life. For example, if the company acquires a trademark that has a useful life of 10 years, then after 10 years, the net book […]

  • What type of costs related to an intangible asset can be capitalized?

    When an intangible asset is purchased, the cost to capitalize on the balance sheet can include the actual purchase price, legal fees, costs incurred to get the intangible asset ready for use, and other incidental expenses.