The company’s intangible assets mainly include patent rights, non-patented technologies, trademark rights, etc. How should the intangible assets obtained be amortized? How is the amortization period determined?

Amortization method of intangible assets

Enterprises should amortize intangible assets in the month they purchase them.

The amortization of intangible assets generally adopts the straight-line method, and the amortization is directly credited to the accumulated amortization.

For intangible assets used by the enterprise for its own use, the amortization amount is included in administrative expenses;

For leased intangible assets, the amortization amount is included in other business costs;

If the economic benefits contained in an intangible asset are realized through the products or other assets produced, its amortization amount shall be included in the cost of the relevant asset.

Amortization period of intangible assets

According to the "Implementation Regulations of the Enterprise Income Tax Law of the People's Republic of China" (Order No. 512 of the State Council of the People's Republic of China) Sixth Article 17 stipulates that the amortization expenses of intangible assets calculated according to the straight-line method are allowed to be deducted. The amortization period of intangible assets shall not be less than 10 years. As an investment or transferred intangible asset, if the useful life is stipulated in relevant laws or contracts, it may be amortized in installments according to the prescribed or agreed useful life. Therefore, if the transferred intangible assets have a useful life stipulated in relevant laws or contracts, they can be amortized in installments according to the prescribed or agreed useful life. For example, if the contract stipulates that the patent right has a useful life of three years, it should be amortized over three years and deducted before tax.

How to confirm intangible assets?

A company's intangible assets can only be recognized if they meet the following conditions at the same time: 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.

The goodwill created by the enterprise and the brands and newspaper names generated internally are not recognized as intangible assets because their costs cannot be measured reliably.

Intangible assets refer to identifiable non-monetary assets that have no physical form and are owned or controlled by an enterprise. It mainly includes patent rights, non-patented technologies, trademark rights, copyrights, franchise rights, etc.

If it meets one of the following conditions, it is considered to be identifiable:

It can be separated or divided from the enterprise. And can be used for sale, transfer, grant of license, lease or exchange, alone or together with related contracts, assets or liabilities.

Deriving from contractual or other legal rights, whether or not these rights are transferable or separable from the enterprise or other rights and obligations.

The existence of goodwill cannot be separated from the enterprise itself, is not identifiable, and is not an intangible asset.