Chapter 9 Fixed Assets and Intangible Assets 415REPORTING FIXED ASSETS AND
INTANGIBLE ASSETSThe amount of depreciation and amortization expense for a period should be reported
separately in the income statement or disclosed in a note. A general description of the
capitalization and depreciation policies should also be reported, as illustrated below
forMarriott International, Inc.Goodwill 506Trademarks, brand names,
and copyrights 226Customer lists 157Patents 136Technology 114Franchises and licenses 92Other 222Exhibit 8
Frequency of Intangible
Asset Disclosures for
600 FirmsIntangible Periodic
Asset Description Amortization Period Expense
Patent Exclusive right to benefit Estimated useful life not Amortization
from an innovation. to exceed legal life. expense.
Copyright Exclusive right to benefit Estimated useful life not Amortization
from a literary, artistic, or to exceed legal life. expense.
musical composition.
Trademark Exclusive use of a name, None Impairment loss if
term, or symbol. fair value less than
carrying value
(impaired).
Goodwill Excess of purchase price None Impairment loss if
of a business over its fair value less than
net assets. carrying value
(impaired).Exhibit 9
Comparison of
Intangible AssetsWhen Does Goodwill Become Worthless?
The timing and amount of goodwill write-offs can be very sub-
jective. Managers and their accountants should fairly estimate
the value of goodwill and record goodwill impairment when it
occurs. It would be unethical to delay a write-down of good-
will when it is determined that the asset is impaired.INTEGRITY, OBJECTIVITY, AND ETHICS IN BUSINESS
Describe how depreciation
expense is reported in an
income statement, and pre-
pare a balance sheet that
includes fixed assets and
intangible assets.5
Source:Accounting Trends and Techniques, 58th ed., American Institute of Certified Public Accountants, New
York, 2004. Note:Some firms have multiple disclosures.