Intangible assets with a limited useful life, determination of the life of intangible assets

Intangible assets are generally patent rights, trademark rights, etc., which are identifiable non-monetary assets owned by enterprises without physical status, and how should the useful life of intangible assets be determined?

A method for determining the useful life of an intangible asset.

1. The useful life of intangible assets derived from contractual rights or other legal rights shall generally not exceed the term of contractual rights or other legal rights. If a contractual or other legal right can be renewed at the expiration of the contract for example, the renewal period can only be included in the useful life estimate if there is evidence that the business does not need to incur significant costs to renew the contract.

2. If there is no clear contract or law stipulates that there is no useful life of intangible assets, the enterprise shall make a judgment based on various factors to determine the period during which the intangible assets can bring economic benefits to the enterprise.

The policy is based on rent

According to Article 67 of the Regulations for the Implementation of the Enterprise Income Tax Law of the People's Republic of China, the amortization expenses of intangible assets calculated according to the straight-line method are allowed to be deducted. The amortization period of intangible assets shall not be less than 10 years.

As an intangible asset for investment or transfer, if the useful life stipulated by the relevant laws or contracts is stipulated, it may be amortized in installments in accordance with the provisions or agreed useful life.

Accounting treatment of amortization of intangible assets.

1. If the unit implements the new accounting standards, the amortization entries for intangible assets are:

Borrow: Administrative expenses – amortization of intangible assets.

Credit: Accumulated amortization.

2. If the unit has not implemented the new accounting standards, the entries for the amortization of intangible assets are: debit: management expenses - amortization of intangible assets.

Credit: Intangible assets.

The life of an intangible asset is determined as follows:

1) Where there are provisions of laws and regulations, its service life shall not exceed the period specified in laws and regulations. Such as trademark rights, patent rights, copyrights;

2) If there are no provisions in laws and regulations, see whether the contract has a specified number of years;

3) refer to the useful life of similar intangible assets of other units; or a combination of various factors, reasonably determined;

4) If the above three circumstances cannot be determined, it is defined as an intangible asset with an indefinite useful life.

For the intangible assets of Wang Liquor whose useful life can be reasonably determined, they should be reasonably amortized in accordance with a certain method during their useful life. For intangible assets with an indefinite useful life, there is no need to amortize them during the holding period, but they must be tested for impairment at the end of each period. Determination of the amount to be amortized for intangible assets with a finite useful life:

The cost minus the estimated net residual value of the residual value of an intangible asset is generally zero, with the following exceptions:

If it is not foreseeable that the intangible assets of Minshi will bring economic benefits to the enterprise, they shall be regarded as intangible assets with an indefinite useful life.

**Intangible assets with contractual or other legal rights should not have a useful life beyond the duration of the contractual or other legal rights. If contractual rights or other statutory rights can be renewed upon expiration, such as renewal, and there is evidence that the enterprise does not need to pay a large cost to renew the contract, the renewal period shall be included in the service life.

2) If there is no provision for the service life of the company, the enterprise should make a judgment based on various factors to determine the period during which the intangible assets can bring economic benefits to the enterprise.

Only if the term for which an intangible asset brings economic benefits to an enterprise cannot be reasonably determined after the above methods, it can be regarded as an intangible asset with an indefinite useful life.

If there is no way to foresee the period during which an intangible asset can bring economic benefits to an enterprise, it shall be regarded as an intangible asset with an indefinite useful life.

Definition of an intangible asset with an indefinite useful life.

If there is no way to foresee the period during which an intangible asset can bring economic benefits to an enterprise, it shall be regarded as an intangible asset with an indefinite useful life.

What is an intangible asset?

Intangible assets are identifiable non-monetary assets owned or controlled by an enterprise and have no physical form. Identifiable means the ability to be severed or severed from a business and used, alone or in combination with related contracts, assets or liabilities, for the grant, licensing, transfer, lease or exchange, or arising from contractual or other legal rights, whether or not such rights can be transferred or severed from the business or other rights and obligations.

A specific understanding of the period of economic interest determined by intangible assets.

1. The useful life of intangible assets derived from contractual rights or other legal rights shall not exceed the period specified in the contractual rights or other legal rights;

2. If the expected period of the enterprise's use of capital for leniency is shorter than the period stipulated in the contractual rights or other legal rights, its service life shall be determined according to the expected period of use of the enterprise;

3. If there is no clear contract or law on the service life of intangible assets, the enterprise shall determine the period of future economic benefits brought by intangible assets to the enterprise in light of various circumstances.

After the above methods, there is still no way to reasonably determine the period of economic benefits brought by intangible assets to the enterprise, so they are regarded as intangible assets with uncertain service life.

Do intangible assets with an indefinite useful life need to be amortized?

Intangible assets with an indefinite useful life do not need to be amortized, regardless of whether there is any indication of impairment, and are subject to impairment testing at the end of each year.

Accounting treatment of amortization of intangible assets.

According to the provisions of the new accounting standards, the amortization of intangible assets is no longer accounted for by the "intangible assets" account, and the enterprise should be accounted for through the "accumulated amortization" account when accruing depreciation, and the actual value of the intangible assets of the enterprise is equal to the book value of the intangible assets minus the balance of accumulated amortization.

Debit: Management expenses (amortization of intangible assets for own use).

Other operating costs (amortization of leased intangible assets).

Manufacturing expenses (amortization of intangible assets used for the production of products, etc.).

Production costs (amortization of intangible assets dedicated to the production of a product or other asset).

Credit: Accumulated amortization.

Hello dear, the method of adopting intangible assets with indefinite useful life is; Straight to the slag line method dIntangible assets with an indefinite useful life should be amortized over 10 years using the straight-line method. Intangible assets with a definite useful life need to be amortized using a systematic and reasonable approach over the estimated useful life, and intangible assets with an indefinite useful life do not need to be amortized, but should be tested for impairment in each accounting period.

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