IntangibleAssetsNetExcludingGoodwillFiniteLivedIntangibleAssetsNetIndefiniteLivedIntangibleAssetsExcludingGoodwillOther intangible assets are identifiable non-physical assets a company owns, other than goodwill, reported net of accumulated amortization and impairment. They include patents, trademarks and brand names, customer relationships, licenses, franchise rights, developed technology, and similar rights that can be separated from the business or arise from contracts or law.
Most of these assets come onto the balance sheet through acquisitions, where each identifiable intangible is recorded at fair value. Intangibles a company develops internally, such as its own brands or research, are generally expensed as incurred and so do not appear, with limited exceptions such as certain software costs.
Intangible assets are accounted for under ASC 350. Those with a finite useful life, like customer relationships or patents, are amortized over that life and tested for impairment when events suggest their value has fallen. Those with an indefinite life, such as some trademarks and broadcast licenses, are not amortized and are tested for impairment at least annually. In XBRL filings the total excluding goodwill is tagged IntangibleAssetsNetExcludingGoodwill, and the two groups are tagged FiniteLivedIntangibleAssetsNet and IndefiniteLivedIntangibleAssetsExcludingGoodwill.
Regulation S-X Rule 5-02.15 requires each class of intangible asset larger than 5 percent of total assets to be stated separately, with the basis for determining its amount, and significant additions or deletions to be explained. Rule 5-02.16 requires accumulated amortization of intangibles to be disclosed separately. The intangibles footnote usually shows gross carrying amounts, accumulated amortization, and expected amortization for each of the next five years.
Because acquired intangibles are recorded at fair value while internally built ones are not, two similar businesses can report very different intangible balances depending on whether they grew by acquisition. Amortization of acquired intangibles is a non-cash charge, and many companies exclude it from adjusted earnings measures. Analysts often subtract intangibles, along with goodwill, to arrive at tangible book value, since these assets would typically fetch little in a liquidation.
A: Other intangible assets are specific, identifiable rights such as patents, brands, or customer lists. Goodwill is the leftover purchase price in an acquisition that cannot be assigned to any identifiable asset.
A: Finite-lived intangibles are amortized over their useful lives. Indefinite-lived intangibles, such as certain trademarks, are not amortized but must be tested for impairment at least once a year.
A: US GAAP generally requires the costs of building intangibles internally, such as advertising and research, to be expensed as incurred. Only intangibles acquired from others are typically capitalized.
GeminIQ turns SEC EDGAR filings into interactive fundamental analysis. Explore the financial ratios and metrics library, the SEC filings glossary, or start screening every US public company.
Start 7-Day Free Trial →