Word New Accounting Standards for the Improvement of Recognition and Measurement of Intangible Asset

1) Improvements in the recognition of intangible assets.

1.The new standard broadens the scope of intangible assets. This is mainly reflected in two aspects:

First, the restriction on the length of time period has been abolished, and the old standard stipulates that intangible assets must be long-term assets, while the definition of intangible assets in the new standard does not use the qualifier "long-term": second, the new standard replaces the enumerative provisions of "patent rights, non-patented technologies, trademark rights, copyrights, land use rights, concessions, etc.) in the old standards with the descriptive provisions of "derived from contractual rights or other legal rights", which makes the new intangible assets standard more covering and forward-looking. And it can avoid the limitation of enumeration method.

2.The treatment of R&D expenditure is internationally convergent. The old standard stipulates that the recorded value of intangible assets developed by an enterprise and applied for in accordance with the law shall be determined according to the registration fees, attorney fees and other expenses incurred when it is acquired in accordance with the law, and the research and development expenses incurred before the acquisition of the intangible assets shall be recognized as the current expenses when they are incurred.

The new standard stipulates that "the expenditure of R&D projects within an enterprise shall be distinguished from the expenditure in the research stage and the expenditure in the development stage", and the expenditure in the research stage shall still be expensed in accordance with the provisions of the old standard; Expenditures incurred during the development phase can only be recognized as intangible assets if the conditions specified in Article 9 are met at the same time. This provision of the new guidelines is undoubtedly much more scientific than the old guidelines. The registration fee and attorney's fee for self-developed intangible assets only account for a small part of the value of intangible assets, and the value of intangible assets is more reflected in the expenses in the development stage, and the capitalization of part of the research and development expenditure is in line with the principles of reliability and relevance of information.

2) Improvements in the measurement of intangible assets.

1.The time value of money is taken into account. The old standard stipulated that the intangible assets purchased should be recorded at the actual price paid for the coarse potatoes.

The new standard stipulates that if the purchase price of an outsourced intangible asset is deferred beyond the normal credit terms, and in fact has a financing nature, the cost of the intangible asset shall be determined on the basis of the present value of the purchase price.

2.Another significant change in the amortization of intangible assets is that the new standard requires companies to review the useful life and amortization method of intangible assets with limited useful life at the end of each year, and to change the amortization period and amortization method when the useful life and amortization method of intangible assets are different from previous estimates. It can be seen that the provisions of the new standards in this regard are more practical and specific, and they also converge with the international accounting standards.

Article 16 An enterprise shall analyze and judge the useful life of an intangible asset when it acquires it.

Where the useful life of an intangible asset is limited, the number of years of the useful life or the amount of output constituting the useful life or other similar units of measurement shall be estimated; Where it is unforeseeable that an intangible asset will bring economic benefits to the enterprise, it shall be regarded as an intangible asset with an indefinite useful life.

Article 17 The amortizable amount of intangible assets with a limited useful life shall be systematically and reasonably amortized during the useful life.

An enterprise shall amortize intangible assets from the time when the intangible assets are available for use to the time when they are no longer recognized as intangible assets.

The amortization method of intangible assets chosen by the enterprise should reflect the expected realization of the economic benefits related to the intangible assets. If the expected realization method cannot be reliably determined, the straight-line method of amortization shall be adopted.

The amortization amount of intangible assets shall generally be included in profit or loss for the current period, unless otherwise provided by other accounting standards.

Article 18 The amortizable amount of intangible assets shall be the amount of its cost after deducting the estimated residual value. For intangible assets for which provision for impairment has been made, the cumulative amount of provision for impairment of intangible assets shall also be deducted. The residual value of an intangible asset with a finite useful life shall be deemed to be zero, except in the following cases:

1) There is a third party undertaking to purchase the intangible asset at the end of its useful life.

ii) Information on the estimated residual value can be obtained based on an active market and that market is likely to exist at the end of the useful life of the intangible asset.

Article 19 Intangible assets with indefinite useful lives shall not be amortized.

Article 20 The impairment of intangible assets shall be handled in accordance with the Accounting Standards for Business Enterprises No. 8 - Asset Impairment.

Article 21 An enterprise shall, at least at the end of each year, review the useful life and amortization method of intangible assets with a limited useful life. If the useful life and amortization method of an intangible asset are different from those previously estimated, the amortization period and amortization method should be changed.

Enterprises should review the useful life of intangible assets with indefinite 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 treated in accordance with the provisions of this Code.

Article 12 Intangible assets shall be initially measured at cost.

The cost of the purchased intangible asset, including the purchase price, related taxes and other expenses directly attributable to the use of the asset for its intended purpose.

If the purchase price of an intangible asset is deferred in excess of normal credit terms, and is essentially of a financing nature, the cost of the intangible asset is determined on the basis of the present value of the purchase price. The difference between the price actually paid and the present value of the purchase price shall be included in the profit or loss for the current period, except for the capitalization that should be made in accordance with Accounting Standard for Business Enterprises No. 17 - Borrowing Costs.

Article 13 The cost of self-developed intangible assets includes the total amount of expenditure incurred after satisfying the provisions of Articles 4 and 9 of these Standards and before reaching the intended use, but the expenditure that has been expensed in previous periods will not be adjusted.

Article 14 The cost of an investor's investment in intangible assets shall be determined in accordance with the value agreed in the investment contract or agreement, except where the value agreed in the contract or agreement is unfair.

Article 15 The cost of intangible assets obtained from the exchange of non-monetary assets, debt restructuring, subsidies and business combinations shall be determined in accordance with the Accounting Standards for Business Enterprises No. 7 - Non-monetary Assets Exchange, Accounting Standards for Business Enterprises No. 12 - Debt Restructuring, Accounting Standards for Business Enterprises No. 16 - Subsidies and Accounting Standards for Business Enterprises No. 20 - Business Combinations.

Under the new accounting standards, the revision of the accounting method for intangible assets has further interpreted the meaning of assets.

Assets are those that have been expended and can bring benefits in the future, which is reflected in the new intangible assets standard as follows:

1.On the capitalization of development expenditures.

Development expenditure refers to the fact that the assets can be determined, so the expenditure at this time is a kind of income that can be formed and can bring benefits to the future, so the expenditure can be capitalized at this time.

2.About amortization.

Because there is a life, there is a basis for amortization, such as fixed assets can be used for 5 years, can be used for 8 years, then amortized by life; As for intangible assets, most of them also have a term of interest, such as concessions and patents, which may be determined by the contract or the law; But there may also be some without a term, such as non-patented technology, there may be some formulas, or others, which can exist forever, and it is impossible to say the term, since there is no term, then there is no amortization of the limbs;

So much for reference.

The new standard highlights the balance sheet method of asset management to account for income tax, and the impact of the new standard on income tax and profit and loss is closer to the real realization of benefits.

The measurement of intangible assets is generally divided into self-development and outsourcing, and self-development, which involves those expenses in the development that are expensed and those that are capitalized. (i.e., the cost of intangible assets that meet the conditions for capitalization, and the cost of intangible assets that do not meet the conditions for direct entry in the current period.) The sum of the price paid and the accumulated taxes at the time of direct purchase is the cost of the purchase.

Amortization is generally divided into intangible assets with known amortization period and intangible assets with unknown amortization period. How to deal with the non-line assets with unknown amortization period (not amortized, but the impairment test should be carried out every year, and if it is found that the intangible asset can already be used for its useful life, it should be treated according to the wireless assets with a known life). The above are all provisions of accounting standards, but the tax law is very different from the accounting standards, the tax law is generally a straight-line method for the amortization of known intangible assets, if the depreciation method adopted by the company is inconsistent, there will be temporary differences; The tax law amortizes intangible assets with an unknown amortization period for no less than 10 years, and this non-amortization with the company will produce a taxable temporary difference, that is, a deferred income tax liability.

Therefore, you can also discuss the amortization of intangible assets from the perspective of income tax. In terms of impairment, at the end of the year, the company will conduct an impairment test on intangible assets, compare the test results with the book value, and if impairment occurs, the impairment provision will be made and the amortization will be re-accrued. In the same way, there are provisions in the tax law, and the tax law does not recognize the impairment of assets, unless you dispose of the assets, it will not be recognized, so you can also discuss it from this point.

Finally, there is the accounting treatment of the transfer of the right to use and the transfer of ownership of intangible assets, and then compare the differences in their accounting treatment. Generally, the transfer of the right to use is to rent, and the transfer is to use. The difference in their treatment can be found in the accounting entries, such as the different treatment of business tax, etc.

Hello, this is the idea of intangible assets that I provide, I hope it can help you. It is recommended that if you have not yet studied the tax law, you can not discuss the provisions of the tax law in terms of amortization and impairment, and just follow the accounting standards. However, if you have already studied tax law, it is recommended that the discussion involve tax law to ensure completeness and depth.