Enterprises will use certain intangible assets in daily business activities, and the intangible assets used should be amortized in accordance with regulations. So how is the amortization of intangible assets handled in accounting?

Amortization accounting treatment of intangible assets

Intangible assets are generally understood in a narrow sense in accounting, that is, patent rights, trademark rights, etc. are called intangible assets.

First of all, it is necessary to clarify that the amortization methods of intangible assets include straight-line method, gross product method, etc. The amortization method of intangible assets selected by the enterprise should reflect the expected realization method of the economic benefits related to the intangible assets. If the expected realization method cannot be reliably determined, the straight-line method is used for amortization.

Enterprises should amortize intangible assets on a monthly basis, and the amortization amount of intangible assets is generally included in the current profit and loss. The amortization of intangible assets used by the enterprise is included in administrative expenses. The amortization of leased intangible assets is included in other operating costs. If the economic benefits of intangible assets are realized through the products produced or other assets, their amortization shall be included in the cost of the relevant assets.

1. Accounting treatment for amortization of intangible assets with limited useful life

1. When acquiring intangible assets

Debit: intangible assets

2. When amortizing on an annual basis:

Debit: manufacturing overhead/administrative expenses

Credit: accumulated amortization

II. Accounting treatment for amortization of intangible assets with indefinite service life

1. When acquiring intangible assets

Debit: intangible assets

Credit: Bank deposits

2. During amortization

Debit: Asset impairment loss

Credit: Intangible asset impairment provision

What is asset impairment loss?

Asset impairment loss refers to the loss caused by the book value of the asset being higher than its recoverable amount. The new accounting standards stipulate that the scope of asset impairment mainly covers the treatment of impairment of fixed assets, intangible assets and other assets unless otherwise specified. The relevant accounting treatments are as follows:

1. This account accounts for the losses caused by the enterprise's provision of various asset impairment provisions based on asset impairment and other standards.

2. This account should be calculated in detail according to the items of asset impairment losses.

3. If an enterprise determines the impairment of assets based on standards such as asset impairment, the amount that should be written down will be debited to this account and credited to "bad debt provision", "inventory devaluation provision", " "Provision for impairment of long-term equity investments", "Provision for impairment of held-to-maturity investments", "Provision for impairment of fixed assets", "Provision in progress - provision for impairment", "Provision for construction materials - provision for impairment", "Provision for impairment of fixed assets", "Provision for impairment of long-term equity investments" Productive biological assets - provision for impairment", "Provision for impairment of intangible assets", "Goodwill - provision for impairment", "Provision for loan losses", "Foreclosed assets - provision for decline in price", "Residual materials - Subjects such as “preparation for price decline”.

4. After an enterprise has made provision for bad debts, provision for inventory depreciation, provision for impairment of held-to-maturity investments, provision for loan losses, etc., the value of the relevant assets must be restored, and the value of the relevant assets must be recovered in the amount of the deduction originally made. Within the value reserve amount, debit "bad debt provision", "inventory depreciation provision", "held-to-maturity investment impairment provision", "loan loss provision", "debt-repaired assets - depreciation provision" based on the restored increased amount. , "Remaining Materials - Preparation for Price Decline" and other accounts are credited to this account.

5. At the end of the period, the balance of this account should be transferred to the "profit for the year" account. There will be no balance in this account after the transfer.