In the course of business operations, companies sometimes choose to use financing to purchase trademark rights. Payments are generally included in accounts such as long-term payables. How should the corresponding accounting be handled?

Accounting entries for financing the purchase of trademark rights

Debit: intangible assets (present value) (unpaid principal)

Unrecognized financing expenses (reverse (squeezed) (unpaid interest)

Loan: long-term payable (annual payment × number of years)

Debit: long-term payable

Loan: bank Deposit

Debit: Financial expenses

Credit: Unrecognized financing expenses

When the purchase price of intangible assets exceeds normal credit conditions and is deferred, it is essentially of a financing nature , the initial cost of intangible assets is determined based on the present value of the purchase price. The difference between the actual price paid and the present value of the purchase price is regarded as an unrecognized financing expense and shall be amortized using the effective interest method during the payment period. The amortization amount shall be included in the cost of intangible assets in addition to meeting the conditions for capitalization of borrowing costs. , shall be included in the current profit and loss within the credit period.

What are intangible assets?

Intangible assets refer to identifiable non-monetary assets that have no physical form. Intangible assets can be divided into broad and narrow senses. Intangible assets in a broad sense include financial assets, long-term equity investments, patent rights, trademark rights, etc., because they do not have physical entities, but are expressed as certain legal rights or technologies. However, in accounting, intangible assets are usually understood in a narrow sense, that is, patent rights, trademark rights, etc. are called intangible assets.

What are long-term payables?

Long-term payables refer to various long-term payables other than long-term borrowings and bonds payable by the enterprise, including lease fees payable for fixed assets leased by financing, and payables for fixed assets purchased in installments. Payments etc.

What are the unconfirmed financing charges?

The content reflected in the unrecognized financing expense account is the unrealized financing incurred by financing leased assets (such as fixed assets, intangible assets) or long-term borrowings that should be amortized in each period during the lease term. Expenses, from another perspective, can be understood as the amortization of interest payments due to financing during the lease term.