Amortization and impairment of intangible assets in CMA knowledge point
Amortization of intangible assets:
1. Intangible assets with uncertain service life shall not be amortized, but shall be tested for impairment at least once a year.
2. Intangible assets with limited service life are amortized within the expected benefit period. Straight-line amortization is generally adopted. When amortizing, debit the expense account and credit the intangible assets account or a separate accumulated amortization account at the same time.
Impairment of intangible assets:
1. Impairment of fixed-term intangible assets
Fair Value and Book Value of Assets-Impaired
Fair value and book value of assets-no impairment occurred.
Impairment loss = book value-fair value
2. Impairment test of intangible assets with uncertain service life: the impairment test is conducted once a year. If the book value is greater than the fair value, the difference is recognized as a loss and the impairment cannot be reversed.
Note: R&D costs cannot be capitalized.
Amortization and impairment reserve of intangible assets
The original value of a new equipment is $400,000, which can be used for five years. Depreciation adopts the double declining balance method, and the residual value is $3,585. How much is the depreciation in the fifth year?
A.$48,255
B.$27,648
C.$34,560
D.$35,403
A: A.
Depreciation in the first year =400k*2/5= 160k.
Depreciation in the second year =(400k- 160k)*2/5=96k.
Depreciation in the third year = (400k-160k-96k) * 2/5 = 57.6k.
Depreciation in the fourth year = (400k-160k-96k-57.6k) * 2/5 = 34.56k.
The fifth year depreciation = 400k-160k-96k-57.6k-34.56k-3.585k = 48255.
Error-prone knowledge points of intangible assets
1. Intangible assets do not include indirect expenses such as advertising fees and management fees for introducing new products, nor do they include expenses after reaching the intended purpose.
2. The research stage is all included in the management expenses, which are first collected through R&D expenditures-expensed expenditures, and then transferred to the management expenses at the end of the period.
3. Those that meet the capitalization conditions in the development stage: R&D expenditure-capitalized expenditure, and those that do not meet the capitalization conditions are included in R&D expenditure-expensed.
4. Intangible assets with definite service life are not necessarily amortized by the straight-line method, which is related to the expected realization mode, and the amortization is obtained in the current month.
5. If the service life is uncertain, it will not be amortized, but impairment test will be conducted at the end of each period, and impairment reserve will be withdrawn. Goodwill is also treated in this way.