Different Amortization Methods for Intangible Assets

Introduction Amortisation refers to the process of allocating the cost of an intangible asset over the asset’s useful life. Only those intangible assets which are assumed to have finite useful lives are amortized over their useful lives, along the lines…

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Capitalizing vs Expensing – Effects on Ratios

Introduction Discretion regarding whether to expense or capitalize expenditures can impede comparability across companies. For example, a company which expenses its expenditure rather than capitalizing it will have lower profitability in the first year but higher profitability in subsequent years,…

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Financial Reporting of Intangible Assets

Introduction There are three primary ways in which intangible assets may be acquired: purchased in situations other than business combinations; developed internally; and acquired in business combinations. The accounting treatment will depend on which of these methods was used to…

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