ACC 281 Week 2 DQ3 - 7418

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Week 2 DQ3

Provide examples of various intangible assets. Why are research and development costs expensed as incurred rather than capitalized? Why are some intangible assets amortized and others are not?

Provide examples of various intangible assets.

I previously worked for a medical manufacturing organization who designed, manufactured and distributed post operative and rehabilitative equipment.  With that in mind I am very family with intangible assets.  Intangible assets are those items useful in the development of an asset however are not a physical material or item.  Such things include patents, copyrights , trademarks…to name a few.  Many people refer to it as intellectual property.

Why are research and development costs expensed as incurred rather than capitalized?

Research and development costs are expensed when incurred rather than capitalized based on their inability to forecast their useful life.  When organizations embark on a new project the research and development expenses are incurred however the end results whether it is a product/service, etc is not complete.  Due to this limited ability of the organization, the forecast on these expenses is undeterminable.

Why are some intangible assets amortized and others are not?

Based on the FASB Statement no. 142, certain intangible assets are amortized based on their useful life, if applicable.  Such a life constitutes a contract or various other legal aspects which depicts a certain time frame for the asset to be useful.   Due to their ability to determine a useful time frame they are then amortized while other intangible assets usefulness may not be so easily forecasted are not.

 

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Week 2 DQ3

Provide examples of various intangible assets. Why are research and development costs expensed as incurred rather than capitalized? Why are some intangible assets amortized and others are not?