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Is A License Agreement An Intangible Asset

Intangible assets are non-physical assets such as patents, licensing agreements, copyrights or proprietary business processes. These types of assets can offer great value to a company, for example. B a well-recognized business name. Coca-Cola, for example, is benefiting from its success through brand recognition. When a company buys another, it takes ownership of certain intangible assets. Each asset must be listed at fair value in the entity`s books. Intangible assets: a non-identifiable monetary asset without a physical substance. An investment is a resource controlled by the entity as a result of past events (for example. B, purchase or self-production) and whose future economic benefits (cash flows or other assets) are expected. [IAS 38.8] The three essential attributes of an intangible asset are therefore: an entity incworks intangible costs when it acquires a licensing agreement from another entity. These costs are usually activated and depreciated over a period of time.

A business may incro our legal fees for various services related to the licensing agreement. These legal fees are activated in certain circumstances because they are related to an intangible asset, although they are not themselves considered intangible costs. Costs related to internal development, maintenance or restoration of intangible assets should generally be taken into account (with a few exceptions). If a contract is SILENT ON RENEWAL POSSIBILITIES, THE CPAs should take into account the company`s history on that contract or on a similar contract. If this type of contract is new to the company, information from other companies in the same sector that have successfully renewed similar agreements can be a useful reference. Recognition criteria. IAS 38 requires an entity to account for an intangible asset, whether purchased or created itself (at costs), if and only if, and only if: [IAS 38.21] of the EITF examines the essential change variable and generally concludes that what constitutes such a variable is a matter of decision. The spirit of statement 142 is to check whether the life of the asset to be evaluated is clear – not the lifespan of another asset that is a variant of the original. Check the broadcast license. Suppose the licensing authority changed the type of transfer authorized by the licence.

This change in the contract would likely change the way the license brings an advantage to the business, as well as the associated cash flow.