Long Lived Assets: Account for Intangible Assets

​Intangible assets purchased in situations other than business acquisitions are recorded at fair value when acquired (assumes to be equivalent to the purchase price). If purchasing several intangible assets, the purchase price is allocated to each asset based on fair value.
 
Intangible assets developed internally are expensed when incurred. Expenditures on original and scientific/technological research are expensed rather than capitalized as an intangible asset. Companies may recognize and capitalize intangible assets from development, if certain criteria are met (i.e. demonstration of technical feasibility of completing the asset and the intent to use or sell the asset). GAAP allows capitalization of certain costs related to software development. Costs incurred to develop a software product for sale are expensed until the product’s technological feasibility is established (which is then capitalized and includes labor costs of building and testing the software).
 
Intangible assets acquired in business acquisitions: When one company acquires another, the “acquisition method” refers to company identified as the acquirer allocating the purchase price to each asset on a fair value basis. If the purchase price exceeds the total amount, the excess is considered Goodwill.