How to account for the installment purchase of intangible assets?
Intangible assets are intangible, intangible, intangible and illiquid, which are owned by specific subjects and will bring additional economic benefits to enterprises in the future. For example: patent right, copyright, franchise right, lease right, trademark right and so on. Accounting treatment is as follows:
Buying intangible assets by stages has the nature of financing.
Borrow: intangible assets (present value of purchase price)
Unconfirmed financing expenses (difference)
Taxes payable-VAT payable (input tax)
Loan: Long-term payable (sum of unpaid principal and interest)
bank deposit
Amortization after reaching the predetermined usable state:
Borrow: financial expenses/construction in progress
Loan: unconfirmed financing expenses.
Payment at the end of each cycle:
Debit: Long-term payable
Loans: bank deposits
Entries for the sale of intangible assets
Debit: bank deposit
Intangible assets impairment reserve
accumulated amortization
Loan: intangible assets
Taxes payable-VAT payable (output tax)
Profit and loss on asset disposal (or debit)