会计英语（简明版） Lesson 7 Long-term Assets.ppt

YE SUN AccountingEnglish@2009 * A franchise is a contractual agreement under which: The franchisor grants the franchisee: the right to sell certain products or services, the right to use certain trademarks or trade names, or the right to perform certain functions, within a certain geographical area. Contract-Related Intangibles: Franchises and Licenses YE SUN AccountingEnglish@2009 * A franchise may be for a limited time, for an indefinite time period, or perpetual. The cost of a franchise (for a limited time) is amortized over the franchise term. A franchise (for an unlimited time) is carried at cost and not amortized. Annual payments for a franchise are expensed. Franchises and Licenses YE SUN AccountingEnglish@2009 * A patent gives an exclusive right to the holder for 20 years. Costs of purchasing patents are capitalized. Costs to research and develop patents are expensed as incurred. Patents are amortized over the shorter of the legal life (20 years) or their useful lives. Legal fees incurred to successfully defend patents are capitalized. Technology-Related Intangibles: Patents (Product Patents and Process Patents) YE SUN AccountingEnglish@2009 * Goodwill is the most intangible of all assets. Goodwill can be sold only with the business. Goodwill is the excess of: the cost (purchase price) over the amounts (price) assigned to tangible and intangible net assets. Goodwill has an indefinite life and should not be amortized. Goodwill YE SUN AccountingEnglish@2009 * Internally created goodwill is not capitalized. Purchased goodwill is recognized only when an entire business is purchased. The initial valuation of goodwill is: the excess of the purchase price over the fair value of the net assets acquired. It is sometimes referred to as a master valuation account (or a plug figure). Goodwill YE SUN AccountingEnglish@2009 * Acquired goodwill has an indefinite life and should not be amortized but is subject to impairment. Impairment test should be performed at least an