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Jan 04

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New Option Available for Accounting for Intangible Assets

The Financial Accounting Standards Board has issued new rules pertaining to accounting by private companies for identifiable intangible assets in a business combination, based on a consensus of the Private Company Council. Accounting Standards Update No. 2014-18, Business Combinations (Topic 805), was issued in December 2014. Under the new rules, an eligible entity is no longer required to to recognize the following intangible assets acquired in a business combination separately from goodwill:

  1. customer related intangibles (unless they can be sold or licensed separately from the business)
  2. non-compete agreements

Such change was intended to address the cost/benefit mismatch of the prior requirements for separate identification. However, a company that elects this treatment must also elect to follow ASU 2014-02, Accounting for Goodwill and amortize the recognized combined goodwill accordingly.

About the author

Renee Howdeshell

Renee Howdeshell is a founding member of Fulcrum Inquiry, an accounting, finance and economic consulting firm that performs damage analyses for commercial litigation, forensic accountings, royalty & distribution audits, financial investigations, and business valuations. Ms. Howdeshell holds a degree in Finance and Marketing from the University of Virginia's McIntire School of Commerce and is a Certified Public Accountant (CPA) and a Certified Fraud Examiner (CFE). She has testified as an expert witness in federal court, CA state court and arbitration regarding the results of her work. She can be reached at (213) 787-4112 and her resume is available at www.fulcrum.com.

Permanent link to this article: http://betweenthenumbers.net/2015/01/new-option-available-for-accounting-for-intangible-assets/

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