Reporting Intangible Assets

Learning Outcomes

  • Demonstrate proper financial statement presentation and disclosures related to intangible assets

Here is the relevant checklist from the AICPA November 2017 Financial Reporting Framework for Small- and Medium-Sized Entities Presentation and Disclosure Checklist:

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F. Intangible Assets [chapter 13] Presentation

  1. Has the entity presented the aggregate amount of goodwill as a separate line item in the entity’s statement of financial position? [13.62]
  2. Has the entity aggregated and presented intangible assets as a separate line item in the entity’s statement of financial position? [13.63]


  1. Has the entity disclosed the following information:
    • The carrying amount in total and by major intangible asset class?
    • The aggregate amortization expense for the period?
    • The amortization method used, including the amortization period or rate, by major intangible asset class?
    • The accounting policy for internally generated intangible assets, including the treatment of development costs, whether expensed or capitalized? [13.64]
  2. If the entity has incurred expenditure on start-up costs, has the entity disclosed the policy for accounting for those costs? [13.66]

As you review some of the disclosures from Albemarle’s 2019 financial statements, see if you can find the checklist items and also see how many of the terms and concepts you can identify and understand now that you have studied the materials.


Goodwill and Other Intangible Assets

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We account for goodwill and other intangibles acquired in a business combination in conformity with current accounting guidance that requires that goodwill and indefinite-lived intangible assets not be amortized.

We test goodwill for impairment by comparing the estimated fair value of our reporting units to the related carrying value…

We assess our indefinite-lived intangible assets, which include trade names and trademarks, for impairment annually and between annual tests if events or changes in circumstances indicate that it is more likely than not that the asset is impaired…If we determine based on the qualitative assessment that it is more likely than not that the asset is impaired, an impairment test is performed by comparing the fair value of the indefinite-lived intangible asset to its carrying amount.

Definite-lived intangible assets, such as purchased technology, patents and customer lists, are amortized over their estimated useful lives generally for periods ranging from five to twenty-five years. Except for customer lists and relationships associated with the majority of our Lithium business, which are amortized using the pattern of economic benefit method, definite-lived intangible assets are amortized using the straight-line method…If the carrying amount of the asset group is not recoverable, the fair value of the asset group is measured and if the carrying amount exceeds the fair value, an impairment loss is recognized.

Research and Development Expenses

Our research and development expenses related to present and future products are expensed as incurred. These expenses consist primarily of personnel-related costs and other overheads, as well as outside service and consulting costs incurred for specific programs.

Now, let’s look at how to report other current and noncurrent assets next.