1. Recognition conditions for intangible assets
Intangible assets can be recognized only if they meet the following conditions at the same time:
1. Economic benefits related to the intangible assets It is likely to flow into the enterprise;
2. The cost of the intangible asset can be measured reliably.
The goodwill created by the enterprise as well as internally generated brands, newspaper names, etc. should not be recognized as intangible assets.
2. Concept
Intangible assets refer to identifiable non-monetary assets without physical form owned or controlled by an enterprise.
If an asset meets one of the following conditions, it meets the identifiability standard in the definition of intangible assets:
1. It can be separated or divided from the enterprise, and can be independently or related to A contract, asset or liability together for sale, transfer, licensing, lease or exchange.
2. Derived from contractual rights or other legal rights, regardless of whether these rights can be transferred or separated from the enterprise or other rights and obligations.
Intangible assets mainly include patent rights, non-patented technologies, trademark rights, copyrights, land use rights, franchise rights, etc.
The existence of goodwill cannot be separated from the enterprise itself, is not identifiable, and does not belong to the intangible assets referred to in this chapter.
3. Characteristics of intangible assets
During the use and formation process, intangible assets have characteristics different from tangible assets:
① Non-entity, one On the one hand, intangible assets do not have a material form that people can feel with their senses. They can only feel it conceptually. It either appears as an image in people's minds, or as a social relationship category in the form of a franchise; on the other hand, it has no tangible loss during use and has no residual value when scrapped.
②Monopoly. The monopoly of intangible assets is manifested in the following aspects: some intangible assets are protected by the legal system and are prohibited from being obtained free of charge by non-holders; they exclude illegal competition from others. Such as patent rights, trademark rights, etc.; although the exclusive rights of some intangible assets are not protected by law, they can actually be monopolized as long as the secrets can be ensured not to be leaked to the outside world, such as proprietary technologies, secrets, etc.; there are also some intangible assets It cannot be separated from the enterprise as a whole. Unless the property rights of the entire enterprise are transferred, others cannot obtain it, such as business reputation.
③Uncertainty. On the one hand, the validity period of intangible assets is difficult to determine accurately due to the impact of technological progress and market changes; on the other hand, the validity period is unstable.
④Enjoy sex. It means that after the paid transfer of intangible assets, they can be owned by several entities at the same time. However, fixed assets and current assets cannot be used in two or more enterprises at the same time. For example, a trademark right transferee enterprise can use it. At the same time, the transfer enterprise can also use it.
⑤ Efficiency. Intangible assets can give enterprises economic benefits that are far higher than their costs. The richer the enterprise's intangible assets, the stronger its profitability. On the contrary, the shortage of intangible assets of the enterprise will weaken the enterprise's profitability and the worse its market competitiveness.
IV. Classification
(1) According to different sources, intangible assets can be divided into purchased intangible assets and self-created intangible assets. Outsourced intangible assets refer to intangible assets purchased from outside the enterprise, which can be purchased alone, together with other assets, or together with the enterprise as a whole. Self-created intangible assets refer to intangible assets formed internally by an enterprise through its own research and development. According to accounting practices, the intangible assets that should be recognized are mainly purchased intangible assets. Self-created intangible assets generally cannot be recognized unless they meet the conditions for capitalization.
(2) According to whether the service life can be determined, intangible assets can be divided into intangible assets with limited service life and intangible assets with indefinite service life. The service life of some intangible assets (such as patents, trademarks, franchises, copyrights, etc.) is limited by laws, regulations, agreements or contracts and can be determined; some intangible assets such as non-patented technology, permanent franchise rights, trade names, The lifespan of secret formulas, etc. is infinite or difficult to determine.
Whether the classification according to the useful life can be determined will determine whether the intangible assets are amortized. For intangible assets with limited service life, the service life should be correctly estimated and its cost should be systematically and reasonably amortized over the service life. For intangible assets with indefinite service life, no matter whether they are recognized or not, they should not be amortized.
(3) According to whether they are identifiable, intangible assets can be divided into identifiable intangible assets and unidentifiable intangible assets. Identifiable intangible assets refer to intangible assets that can be specifically identified, and most intangible assets fall into this category. Unidentifiable intangible assets refer to intangible assets that are related to the entire enterprise and cannot be identified individually, generally referring to goodwill. Since goodwill is connected with the enterprise as a whole and cannot exist independently of the enterprise, goodwill cannot be specifically identified. Classification according to identifiability is conducive to the recognition and measurement of intangible assets. It is worth noting that China’s Accounting Standards for Business Enterprises define intangible assets as identifiable intangible assets.
5. Initial Measurement of Intangible Assets
Intangible assets shall be initially measured at cost.
(1) For self-developed intangible assets, the cost includes the total expenditure incurred from the time the intangible asset recognition conditions are met until the intended use is achieved, but expenditures that have been expensed in previous periods will not be adjusted.
(2) Intangible assets acquired through other means.
VI. Subsequent measurement of intangible assets
1. Determine whether the service life of intangible assets is certain
If the service life of intangible assets is limited, the use should be estimated The number of years of life or the number of similar units of measurement such as output that constitutes the service life; if it is impossible to foresee the period during which the intangible asset will bring economic benefits to the enterprise, it shall be regarded as an intangible asset with an indefinite service life.
(1) Intangible assets held by an enterprise usually originate from contractual rights or other legal rights, and the contract or law has a clear service life.
The service life of intangible assets derived from contractual rights or other legal rights shall not exceed the term of the contractual rights or other legal rights. If contractual rights or other legal rights can be extended upon expiration through contract renewal, etc., and there is evidence that the enterprise does not need to pay a large cost to renew the contract, the renewal period should be included in the useful life.
(2) If the contract or law does not stipulate the service life, the enterprise shall comprehensively judge all factors to determine the period during which the intangible assets can bring economic benefits to the enterprise.
Only if the period during which the intangible asset can bring economic benefits to the enterprise cannot be reasonably determined through the above methods, can it be regarded as an intangible asset with an indefinite useful life.
2. Factors that should be considered in determining the service life of intangible assets
When an enterprise determines the service life of intangible assets, it usually should consider the following factors:
(1) Application The usual life cycle of the products produced by the asset, and the available information on the service life of similar assets;
(2) The current situation of technology, processes, etc. and estimates of future development trends;
>(3) Market demand for products produced or services provided by the asset;
(4) Actions that current or potential competitors are expected to take;
(5) Expected maintenance expenditures to maintain the asset’s ability to bring economic benefits, and the company’s expected ability to pay related expenditures;
(6) Relevant legal provisions or similar restrictions on the control period of the asset, Such as franchise period, lease period, etc.;
(7) Correlation with the service life of other assets held by the enterprise, etc.
3. Amortization of intangible assets
The amortization amount of intangible assets is the amount after deducting the estimated residual value from the cost. For intangible assets for which impairment provisions have been made, the accumulated amount of impairment provisions for intangible assets that have been made shall also be deducted.
The residual value of an intangible asset with a limited useful life shall be deemed to be zero, except in the following circumstances:
(1) A third party promises to purchase the intangible asset at the end of its useful life;
(2) The estimated residual value information can be obtained based on the active market, and the market is likely to exist at the end of the useful life of the intangible asset.
The amortization of intangible assets by an enterprise shall start from the time when the intangible assets are available for use until the time when they are no longer recognized as intangible assets.
The amortization method of intangible assets selected by the enterprise should reflect the expected realization method of the economic benefits related to the intangible asset. If the expected realization method cannot be reliably determined, straight-line amortization shall be used.
The amortization amount of intangible assets should generally be included in current profits and losses (administrative expenses, other business costs, etc.). If the economic benefits contained in an intangible asset are realized through the products or other assets produced, its amortization amount shall be included in the cost of the relevant asset.
Enterprises should at least review the service life and amortization method of intangible assets with limited service life at the end of each year. If the useful life and amortization method of an intangible asset are different from previous estimates, the amortization period and amortization method should be changed.
Enterprises should review the useful lives of intangible assets with uncertain useful lives in each accounting period. If there is evidence that the useful life of an intangible asset is limited, its useful life should be estimated and handled in accordance with the relevant provisions on intangible assets with limited useful life.
7. Disposal and scrapping of intangible assets
The rental income and related expenses incurred by the enterprise from transferring the right to use intangible assets are recognized as other business income and other business costs respectively.
When an enterprise sells intangible assets, the difference between the price obtained and the book value of the intangible assets shall be included in the current profits and losses (non-operating income or non-operating expenses).
If an intangible asset is not expected to bring economic benefits to the enterprise, the book value of the intangible asset shall be written off and its book value shall be transferred to current profits and losses (non-operating expenses).
8. Cases
Yuan Longping Agricultural High-tech Co., Ltd. (Longping High-tech) is the main sponsor of Hunan Academy of Agricultural Sciences, jointly with Hunan Zajia Rice Research Center and Hunan Oriental Agricultural Industry Company , Mr. Yuan Longping and others jointly initiated the establishment, mainly engaged in the cultivation, propagation, promotion and sales of high-tech crop seeds and seedlings, mainly hybrid rice, hybrid peppers, and watermelons.
What is special about this company is that it has an intangible asset, which is the name of Mr. Yuan Longping, a famous Chinese scientist. According to the agreement signed between the company and Mr. Yuan Longping, Mr. Yuan Longping agreed to use his name as the name of the joint-stock company and the stock abbreviation when the company's shares were listed during the existence of the joint-stock company, and the company paid Mr. Yuan Longping a name right usage fee of 5.8 million yuan.
Yuan Longping is an academician of the Chinese Academy of Engineering and "the father of hybrid rice in the world." According to the evaluation of relevant asset appraisal firms, the brand value of the three words "Yuan Longping" is as high as 100.89 billion yuan.