Intangible assets can be recognized as intangible assets if they meet the following conditions, specifically: the economic benefits related to the intangible assets are likely to flow into the enterprise; the cost of the intangible assets can be measured reliably.

What does capitalization mean?

Capitalization means that qualified relevant expenses are not included in the current profit and loss, but are included in the cost of relevant assets and are managed as asset items on the balance sheet. Commonly understood as capitalization, it is the way a company classifies expenses as assets.

What do intangible assets include?

Intangible assets refer to identifiable non-monetary assets without physical form held by public institutions, including patent rights, trademark rights, copyrights, land use rights, non-patented technologies, etc. Amortization of intangible assets is a method of amortizing the original value of intangible assets within its effective period. Generally, the straight-line method is used, and the debit of the "intangible assets" account is directly included in the amortization. The amortization period of an intangible asset begins when it is available for use and ends when it is derecognized. It should be systematically and reasonably amortized within the expected useful life in the month of acquisition, and no amortization will be performed in the month when the intangible asset is disposed of.

What is the difference between capitalization and expense of intangible assets?

The expenditures incurred by an enterprise in the process of researching and developing intangible assets are divided into the research stage and the development stage. The expenses incurred in the research stage and development stage should be treated differently: the expenses incurred in the research stage shall be treated as expenses. ; Capitalization of expenses incurred during the development phase is allowed if relevant conditions are met.

How to handle accounting for self-research and development of intangible assets?

When R&D expenditures occur:

Debit: R&D expenditures - expensed expenditures (research phase expenditures and development phase expenditures that do not meet capitalization conditions)

R&D expenditures - capitalized expenditures (development stage expenditures that meet capitalization conditions)

Credit: bank deposits/raw materials/employee salaries payable, etc.

R&D expenditures that will be expensed at the end of the period Transferred to current management expenses:

Debit: management expenses

Credit: R&D expenditures - expensed expenditures

The R&D expenditures that meet the capitalization conditions are intangible The cost of intangible assets is transferred when the asset reaches a usable state:

Debit: intangible assets

Credit: R&D expenditure - capitalized expenditure