Intangible Assets, Goodwill, and Asset Impairment and Disposal Issues

This chapter describes the accounting guidance for indefinite-lived intangible assets, definite-lived intangible assets, and goodwill, discussing impairment of assets and the issues associated with the recognition of liabilities that arise from the use and disposal of long-lived assets. An intangible asset with a finite useful life is to be amortized over that useful life without regard to an arbitrary maximum life. A finite-lived intangible asset is to be amortized over that life in a manner that best reflects the pattern in which the economic benefits of the asset are consumed. If that pattern cannot be reliably determined, a straight-line pattern may be used. An intangible asset should not be written down or off in the period of acquisition unless it becomes impaired. An optional qualitative assessment is permitted in considering whether an indefinite-lived intangible asset is impaired. When electing this qualitative assessment, an entity must consider whether it is more likely than not that the fair value of the intangible asset with an indefinite life is below its carrying value.