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The Intangibles

In: Business and Management

Submitted By DinoFree
Words 1667
Pages 7
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(The Walt Disney Company)
The Intangibles On the balance sheet of many corporations you find listed under non-current assets any intangibles a company might have. I’ve included a copy above of The Walt Disney Company’s balance sheet as an example. It lists intangible assets and goodwill separately near the bottom of the asset section. I’ll be discussing various intangibles such as goodwill and how they are acquired, recorded and valued in accordance with both GAAP and IFRS. It’s important to have an understanding of the current differences in reporting requirements as the U.S. attempts to move closer to a more uniform reporting system with the majority of international corporations, a desirable change for users of financial statements that may wish to compare international corporations on even ground. An intangible asset is defined as a non-monetary asset without physical substance and having the probable ability to be used for future economic benefit from the costs associated. Associated costs are the costs of acquiring, creating and possibly advertising depending on the type of intangible. Each intangible asset is required to be disclosed in the notes section of the financial statements. Details of disclosures will be discussed in relation to each topic as it is covered.
Acquisition (GAAP and IFRS similar) The fist intangible I’ll discuss is quite common when businesses or segments are purchased. In fact goodwill is only recognized when a transfer has occurred whether by purchase or merger. The idea is that the acquiring company recognizes some value in the company beyond the listed net value of the acquired. The same principle applies in a merger. Goodwill is defined as the value of a company’s brand name, customer base, customer relations, and employee relations. It is very subjective and difficult to define its value accurately.

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