Intangible Non-Current Assets

Question 1

What do we do with intangible assets with a useful life.

Answer 1

Amortise them.

Amortisation is calculated the same way as depreciation is ( add current year to expenses, deduct accumulated from intangible asset in NCA.)

Question 2

Examples of intangible assets

Answer 2

Licenses

Patents ( right to produce something for a fixed period without anyone copying e.g medicine)

Brands ( only recognise purchased ones in financial statements, not internally generated ones)

Question 3

Goodwill?

Answer 3

When the value of a business is greater than it’s net assets.

This occurs from having skilled workers, loyal customers, reputation and recognition etc.

Internally generated goodwill should not be recorded in the accounts as subjective.

Question 4

What is R&D and what is the double entry

Answer 4

Companies spend research and development to enhance competitiveness.

The credit entry will be bank/ payable.

Research is classified as an expense.

Development will be an intangible asset.