IntangibleAssetsNetIncludingGoodwillGoodwillIntangibleAssetsNetExcludingGoodwillTotal intangible assets is the combined carrying value of a company's non-physical, long-lived assets, including goodwill and identifiable intangibles such as patents, trademarks, customer relationships, licenses, technology, and franchise rights. Finite-lived intangibles are shown net of accumulated amortization, and all intangibles are shown net of any impairment.
Most recorded intangibles come from acquisitions. Intangibles a company develops internally, such as its own brand or research, are generally expensed as incurred and do not appear on the balance sheet.
Regulation S-X Rule 5-02.15 requires each class of intangible asset larger than 5 percent of total assets to be shown separately, along with the basis for measuring it, and Rule 5-02.16 requires the related accumulated amortization to be disclosed. In XBRL, the combined figure is tagged IntangibleAssetsNetIncludingGoodwill, while companies more often report its parts: Goodwill and IntangibleAssetsNetExcludingGoodwill. When only the parts are reported, the total is their sum.
Accounting follows ASC 350. Goodwill and indefinite-lived intangibles, such as some trademarks and broadcast licenses, are not amortized and are tested for impairment at least annually. Finite-lived intangibles are amortized over their useful lives and tested when events suggest they may not be recoverable. Purchased software and capitalized internal-use software are usually treated separately from acquired intangibles, and some companies include them here while others report them within property and equipment.
Because intangibles are mostly the product of acquisitions, their size relative to total assets and equity shows how much of a company's balance sheet rests on prices paid for past deals. Analysts subtract total intangibles to get tangible assets, tangible common equity, and tangible book value per share. A company with intangibles exceeding its equity has negative tangible book value, which is common after large acquisitions. Watch amortization of acquired intangibles as well, since many companies exclude it from adjusted earnings.
A: Yes. The total combines goodwill with identifiable intangibles such as patents, trademarks, and customer relationships. Many companies report goodwill and other intangibles on separate lines, so the two are added together.
A: US GAAP generally requires companies to expense the costs of building their own brands and research as incurred. Only intangibles acquired from others, individually or in a business combination, are usually recorded as assets.
A: Finite-lived intangibles are amortized over their useful lives. Goodwill and indefinite-lived intangibles are not amortized by public companies; they are tested for impairment at least annually instead.
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