Regarding whether the payments created an
intangible asset, the IRS noted that the taxpayer did not create, originate, enter into, renew, or renegotiate any agreement with the target.
It is also important to determine to what extent
intangible assets are transferable.
It would seem that the profession is still searching for the most cost-efficient way to faithfully reflect this
intangible asset in the financial statements.
The following are a few examples of
intangible assets that are considered as passive income generators - computer software, patents, copyrights, licenses, franchises, trade-marks and goodwill.
In spite of the accounting rules that establish generally accepted criteria regarding the measurement, recognition and disclosure of these
intangible assets, the literature points out that subjective factors could come into play, permitting that their value to be manipulated easily, especially for so-called intellectual capital.
This is because under the regulations, there is an expanded view of what comprises
intangible asset value.
ASUs 2011-08 and 2012-02 provide entities the option to qualitatively assess events and circumstances relevant to the fair value of a reporting unit or indefinite-lived
intangible asset to determine whether a quantitative test is required.
We show that the transition to IAS/IFRS did not change the overall amount of
intangible assets, even though it operated substitution effects in favour of goodwill.
Kenan Patrick Jarboe and Roland Furrow,
Intangible Asset Monetization: The Promise and the Reality, Athena Alliance Working Paper 03 (Washington, DC: Athena Alliance, April 2008), http://www.athenaalliance.org.
Except reduction of tangible assets in value, another trend is that the production is mostly based on such
intangible assets (IA) as knowledge, know-how, creativity and others.