Chapter Review

Key Takeaways

• Intangible assets are identifiable nonphysical assets that provide future economic benefits.
• Purchased intangible assets are initially measured at historical cost.
• Finite-life intangible assets are amortized over their useful lives.
• Indefinite-life intangible assets and goodwill are not amortized.
• Most internally generated research and development costs are expensed under U.S. GAAP.
• Goodwill arises only in business combinations when purchase price exceeds the fair value of identifiable net assets.
• Long-lived assets are tested for impairment when indicators exist, while goodwill and indefinite-life intangibles undergo periodic impairment testing.
• Disposal accounting removes the asset and recognizes any gain or loss based on carrying amount.
• Financial statement disclosures include useful lives, amortization methods, impairment losses, and carrying amounts.

Although intangible assets cannot be touched, they often represent some of the most valuable resources a company owns.