The Financial Accounting Standards Board issued an
Some examples of intangibles include brand recognition, copyrights, patents, trademarks, trade names, customer relationships and customer lists. There are already several areas of U.S. GAAP that provide guidance on intangibles, FASB noted. An entity currently evaluates the specific facts and circumstances and nature of the intangible — such as the intangible's purpose and how it was obtained or developed — to determine the relevant areas within GAAP. The recognition of an intangible can vary according to the basis of the nature of the intangible, its stage of development, and whether it was acquired in a business combination or an asset acquisition. That means some intangibles are recognized as assets either in whole or in part, while others are not recognized as assets at all. In some cases, the costs incurred to create an intangible that's not recognized as an asset are considered to be R&D efforts, while, in other cases, those costs are considered to be normal operating expenses (both general and administrative). If it's indeed recognized, the subsequent accounting for an intangible asset can include amortization, impairment and remeasurement (such as remeasurement of certain crypto assets to fair value).
The invitation to comment is being issued as part of FASB's research project on the accounting for and disclosure of intangibles. The ITC aims to explore ways to improve this area of financial reporting, which includes the accounting for acquired and internally developed intangibles. An ITC is a staff document prepared at the direction of the FASB chair in which the board does not express any preliminary views. Responses to the questions in this ITC will help inform the board as it considers whether to add a project to its technical agenda on intangibles.
The ITC uses the term intangibles to include both (1) intangibles recognized as assets in the financial statements and (2) intangibles and related costs not recognized as assets in the financial statements.
Specifically, FASB would like to understand:
- Whether there is a pervasive need to improve GAAP related to the accounting for and disclosure of intangibles (that is, is there a case for change);
- What intangibles, or groups of intangibles, FASB should consider addressing;
- What potential solution(s) FASB should consider — including whether the potential solution or solutions are narrow for a specific intangible or could be applied broadly to a group of intangibles — and the expected benefits and expected costs of the potential solution(s);
- Whether different accounting for intangibles should exist depending on how the asset is obtained (internally developed, acquired in a business combination, or acquired in an asset acquisition); and,
- What information about intangibles an investor utilizes (or would utilize) for its analysis and how that information influences the investor's capital allocation decisions.
FASB is asking for comments on the
