Intangible assets: to amortize or not?

Article Abstract:

Amortization of intangible assets has been the subject of the long-standing and bitter dispute between the IRS and acquiring corporations that wish to step up amortizable assets of the companies they are purchasing. According to a General Accounting Office report, IRS is challenging 2,166 intangible asset claims, amounting to $23.5 billion. To clear up the controversy, Congress is considering three individual bills dealing with the treatment of acquired intangible assets. The Intangible Amortization Clarification Act(s) of 1991, introduced by the Representatives and the Senate, seek to modify tax rulings for the amortization of customer-based intangibles. Moreover, House Ways and Means Committee Chairman Dan Rostenkowski proposed an amortization period of 14 years for all intangibles acquired after the enactment of the bill. The extent by which these bills will change the procedures on handling intangibles remains to be seen.

Laws, regulations and rules, Amortization

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Investing in intangible assets

Article Abstract:

Corporate intangibles are among the most interesting aspects of businesses that potential investors should scrutinize and review well. Examples of these are hidden assets and licensing agreements. Four measurements to assist the investor in evaluating intangibles are presented. They are sizeable research and development budgets, the existence of secured brand names, a demonstrated flexibility on joint venture proposals and assets that have lasting value.

Methods, Measurement, Investments

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